Corporate responsibility at IBM is a class act so high expectations then when the IBM Institute for Business Value this week came out with a piece on CSR: Attaining sustainable growth through corporate social responsibility. Dazzling stuff but one or two clangers as well.
IBM gets it with the concept of a 'CSR Value Curve' moving away from below the line cheque book philanthropy and minimal legal compliance towards more strategic integration. The day of the outsize cheque with the requisite cheesy photo opportunity are numbered. If enlightened businesses are negotiating collaborative governance arrangements directly with concerned stakeholders then so for the better. If better environmental management also reduces costs and turns on employees, great. If strategic philanthropy can act as a sand box for developing new business models to profitably unlock excluded markets then business is serving society well and making the greatest impact possible.
'Ubiquitous connectivity' has empowered the masses to challenge the power of business. But then I think IBM takes it a bridge too far:
the balance of power between business and society has shifted toward society and away from business
This is dangerous thinking and may lead business leaders to assume, if they have no power in society, they carry less responsibility beyond the regulatory minimum. Some of the greatest ethical blunders in business have been borne from such thinking. And business is part of society not something separate from it.
In fact, the more dramatic shift is the shrinking role of government. NGOs have swelled to bridge the gap and act as a spot check on business. Citizens, as employees, shareholders and consumers are indeed empowered with social media tools to place significant and sometimes conflicting pressure on the corporation but make no mistake, the economic and political forces still are firmly on the side of business. So with business looming so large on the landscape, there is naturally increased pressure for greater corporate accountability and social engagement well beyond the realm of just staying low, paying taxes and obeying the law.
If there is any doubt about the power of business in society we need look no further than Wal Mart. Recently the FT reported than environmental lobbyists from both sides of the fence were spending as much time in Bentonville, Arkansas as Washington DC. Wal Mart's supply chain policy apparently is as potent as the regulatory authority of the remaining global super power. Wal Mart understands its role, the responsibility to be more broadly accountable and to lead on sustainability issues. So far they have been making a decent fist of it.
But before all else, transparency is fundamental:
In fact, the company that invites more eyes and on its operations can preempt problems that would otherwise become very expensive to solve.
But when it comes to provision of CSR information, IBM identify a tricky disclosure dilemma. 63% of executives believe they have sufficient information to satisfy customers concerns on CSR but only 33% are confident they understand customer expectations.
Even the most open and proactive firms face dilemma: Too often they just don't know what they know. And when they do, they don't know what to share.
Representing a real shift, many NGOs are today more prepared to engage with business towards a common goal. Look at HSBC and WWF, Unliever and Oxfam or, more eye catching perhaps, Greenpeace and McDonalds. Strange bedfellows and maybe not permanent friends but working together for incremental progress.
Such collaborations help business reduce risk and even bring new product concepts to market. Stakeholder management then is about much more than information provision, it is about relationships. And if an influential study on CSR Communications released jointly last week by Edelman, Net Impact, Boston College Centre for Corporate Citizenship and the World Business Council for Sustainable Development is to be believed business has yet a long way to go:
Companies now grasp the business case for effective stakeholder engagement and are working hard to improve communication lines—whether it’s through direct stakeholder contact, new web-based CR reporting, or other channels that allow for greater responsiveness to stakeholder issues and recommendations. Yet stakeholders of every stripe—NGOs, SRI fund managers, journalists, internal audiences—have criticized CR communications and engagement.
So is IBM is a tad premature or naive to suggest the following?
Imagine the information gathering ability and the cost savings that could come from asking the foot soldiers of a global NGO to monitor working conditions or chemical spills.
I think so. Maybe NGOs will foot soldier for corporate audits but they won't expect to do it on the cheap nor settle for anything less than very high levels of enterprise wide performance and assurance. After all, NGOs have their own brand credibility and stakeholder interests to protect. They will also rightly expect business to invest in their continued and long range capacity, NGOs too have capital requirements.
NGOs can play an important role as an independent verifier of corporate social performance and such public assurance unlocks real value from a fairly expensive corporate social audit programme. But where it gets really interesting is when both sides can work together on product, process and quality assurance design. For example, the Fair Trade and Forest Stewardship Council marquees command a premium, create new revenue streams, reduce risk and deliver social justice. The micro revolution has changed banking even in the developed world and mobile telephony is pushing far down the long tail to access huge new markets - all of this necessarily requires some level of NGO collaboration.
It is impressive to see a heavyweight like IBM throw significant intellectual horsepower behind sustainability and challenge for innovation.