Thursday, April 28, 2016

7 challenging questions on CSR

I am looking forward to my first trip to Bratislava on May17th to take part in the annual CEE CSR Summit as the guest of the Pontis Foundation - the leading organization in Slovakia promoting CSR, philanthropy and capacity development. The annual CEE CSR Summit is the oldest and largest event on corporate responsibility in Central and Eastern Europe, and is attended by almost two hundred experts on CSR, sustainability, the environment, and human resources.

One of the great things about speaking in different countries is that you are able to spread the word in so many different languages. In preparation for the conference, I was happy to be interrogated by the conference team and by local press. This interview was published recently.....

To spare you the pains of Google Translate, here is the interview in full .. in English. Thank you to journalist Veronika Sokolová for challenging me with these questions:

You are leader of a consulting agency, which focuses on issue of corporate social responsibility. Can you describe your working day? 
If I had a job where I could describe my working day, I would probably look for another job! My days are never the same. One the one hand, I am very hands-on in strategy and reporting projects for clients, on the other hand I try to stay ahead of the curve on the developments in the sustainability world. I do a lot of talking with people to hear about their activities in the sustainability area, and I do a lot (a lot!) of writing. My work includes a host of different activities with clients around sustainability reporting – ranging from interviewing anyone from a CEO to a maintenance manager in a company, taking part in conference calls or client meetings, analyzing spreadsheets, developing concepts, creating narratives, proofing, helping align design to content and supporting PR and comms. A not insignificant amount of time is taken up with preparing offers for client projects or bids for reporting contracts – some of which are successful! 

At a more general level, I spend a lot of time scanning new sustainability reports that come across my radar and reviewing several in detail for publication of expert reviews, for articles for my blog or as part of a benchmarking exercise. Several times a year I find myself preparing for speaking engagements at conferences or running workshops while several times a day I scan CSR news from a range of sources. I always try to make time to check what's happening in my social media channels and try to stay involved as much as time permits. I guide the work of my small team and spend time reviewing the status of their work and planning next steps. Many times a month I speak to people who want to find work in the CSR field or with companies that haven't quite decided how they want to move forward in sustainability and seek general advice. So every day is varied, all days are very full and almost(!) all days are really fun.

Which standard should company follow, to work in accordance to CSR? What are the main criteria or measurements, on the basis of which you report? 
The leading global standard for sustainability reporting is the Global Reporting Initiative G4 Standard. While this presents some challenges, it is a good framework and structures the reporting process well. It is possible to report without using any standard in particular, but the use of a widely known standard such as G4 makes it far easier for users of the report to navigate the content and understand the scope of what's reported. One of the big improvements that the G4 standard introduced over its predecessor versions is the focus on what is called in sustainability jargon – materiality – meaning the most important sustainability impacts of the business. A report should not be what I call a "shopping list" of activities. It should focus on the most important impacts of the company and their relevance to stakeholders. I think we are seeing shorter and more focused reporting today, replacing the very very long (and boring) reports of the past.

The European Parliament imposed a directive which obliges thousands of companies to disclose information about their social responsibility. Is it right to make reporting on CSR a duty for company? Don't you think that this will cause companies, not interested in CSR, to start faking the data for reports? 
Yes, I believe it is absolutely right to legislate for companies to be transparent. I believe the impacts of business on our lives are so broad and so profound that we have a right to know how companies do business. I do not believe that the way to report needs to be prescribed in detail, although some minimum expectations should be set. In this way, companies who want to do more because they genuinely believe this can realize benefits for them can do so, while companies who wish to disclose the minimum can also do that. The experience of the Danish framework of "report or explain" for the 1,100 largest companies that was established several years ago has shown that most companies, once they get on the train, find that they enjoy the ride. There will always be companies who break the law.. for example, the big story of Volkswagen cheating on greenhouse gas emission measurements from their vehicles that was exposed last year. Generally, I do not believe that it is the nature of most companies to deliberately falsify data in order to report positive performance. But I might be naïve. The idea is for us all, as stakeholders of companies, to be vigilant and examine what we are hearing from companies. I always think that sooner or later, the bad guys get caught.

When an entrepreneur sells services and goods and customers voluntarily buy them, logically both of them are better off- it is a win-win situation. Many companies also offer various discounts for disadvantaged groups because it is an advertisement for them. Customers know about it. At the same time, companies use an arbitrator like your agency to prove or certify that the firm brings benefit for society. Why do they do that? Is it kind of PR for them? 
There is a branch of CSR that is called cause-related marketing and it is exactly this. Everyone wins. The business sells, the consumer feels good about having bought a product with added social value and the community or social cause benefits. At the same time, companies have something to put in their CR Report. There is nothing wrong with this – provided everyone actually does win. The social contribution should be something that's meaningful and the way of engaging consumers should be appropriate in relation to the social cause that's being promoted. When Kentucky Fried Chicken made a promotion to support Breast Cancer Awareness, for example, it didn’t go down too well and they were attacked for contributing to the problem by producing food which has carcinogenic byproducts rather than supporting a worthy cause. 

CR is a way of doing business, it shouldn’t be a separate charitable project, so using marketing and gaining some good PR from CR is fine.. as long as it's appropriate, balanced and transparent. 

You have a lot of experience, how does the process work? First, customers start to look for, let's say, ecologic goods and then companies adapt their corporate values or rather companies bring new trends and educate their customers? 
I am not sure I buy that argument that mass consumers are driving the change in demanding sustainable products from companies and I certainly don't think we have anywhere near a critical mass of consumers that are prepared to buy "sustainably" sourced products at a price premium. I think the dynamic comes more from company innovations which impact the entire competitive landscape, and governments, NGO's, academics, investors, sustainability experts and entrepreneurs who keep the conversation going about what's good for consumers and create new pressures to support collective efforts to meet sustainability standards. Did Toyota produce the first hybrid car because consumers asked for it, or because they could, and take a reputationally-positive leadership position at the same time, increasing awareness and expansion of consumer demand rather than being driven by it? Did General Electric form Ecomagination, now a multi-billion dollar business, because consumers asked for it or because it was the right business opportunity "with benefits"? 

I think it is the professional movement that creates innovation targeted to address a social or environmental challenge or opportunity that moves the needle, and this in turn creates the demand. Having said that, there are examples of where consumer influence has changed the behaviour of corporations or led to innovation such as the new sharing economy of AirBNB and Uber that show how consumers can change markets in different ways. 

How many agencies like yours are currently operating in this sector? Is demand for such reports more in Western society, where companies may afford to invest more to CSR? 
I couldn’t guess how many Sustainability Reporting consulting firms there are … there are different types of firms that specialize in different aspects of sustainability consulting, with or without reporting, and there are other branding, communications and PR firms that compete for a slice of the reporting business. Our business is not PR or comms-driven, we are expert in the way companies can progress the sustainability agenda and report their impacts and performance professionally and transparently. Sometimes reports that have too much of a PR spin without enough sustainability substance do not succeed in building trust, which is the objective of every report. The idea is not to gloss the language and embellish the stories but to present a balanced picture in an engaging way. 

Reporting has steadily increased over the past 20 years and is continuing to do so. The cost of producing a report can be modest or highly invested. I don't think it's always about what companies can afford, it's about what they want to achieve. 

U.S. universities tend to refuse money from tobacco companies which want to contribute to various research. Are there any ways for tobacco and alcohol companies to make a better reputation, according to CSR standards? 
This is a tricky one. CSR today has evolved to refer to the positive impact a company has on society through its core business and not just through initiatives to save energy or volunteer in the community. If you subscribe to this view, the core impact of a tobacco company on people's health and even on the cost of healthcare as result of tobacco-related diseases is not so positive, whichever way you look at it. Therefore, many would say that a company in this sector has no business talking about corporate responsibility as its core product causes undisputable damage. 

However, a different view of CSR relates to how you do business – irrespective of the product you sell (provided it's legal), the focus is on doing your business in an ethical and responsible way – responsible marketing, energy management, treating employees with respect and more. In this case, tobacco, alcohol and all companies in controversial industries can do business in a positive manner and often go to great lengths to prove that they are doing so. 

The problem with the first argument is where you draw the line – tobacco damages people's health but so do the products of many other industries – foods that can lead to obesity, addictive drugs, toxic chemicals used to make toys or clothes… not to mention energy intensive industries that contribute to climate change and are the indirect cause of many health problems. San Francisco became the first state in the U.S. to ban the sale of plastic bottles – but I don't recall seeing that it banned the sale of cigarettes….There are laws banning many harmful products – but I am not aware of a country that bans cigarette sales. (Update: It seems that Turkmenistan has actually banned sales of all tobacco products) I believe tobacco companies have long since realized that they can never have a positive reputation – in my view, their efforts will always be about having a less-bad reputation. By behaving as responsible citizens in every other way and achieving high scores in many sustainability rankings and indices that measure sustainable companies, and by reporting as transparently as they can on everything but the harm that smoking causes, they manage to mitigate some reputational damage.

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Understanding G4: the Concise Guide to Next Generation Sustainability Reporting  AND  Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices . Contact me via Twitter (@elainecohen)  or via my business website   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm).  Need help writing your first / next Sustainability Report? Contact elaine:  

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