Lawson on Corporate Social Responsibility:Thou Shalt Obey The Law

My, my! Industry Corporate Social Responsibility (CSR) white papers are becoming like buses - nothing for ages then all of a sudden three in a row. First the Economist Intelligence Unit supported by SAP, then IBM and now Lawson enters the fray with the oddly titled The Convergence of Corporate Social Responsibility and Information Technology published this week on Retail Solutions Online.

Jeff Frank, Lawson Vice President for Marketing authored the paper which gives a good over view of CSR definitions, suggested key trends and the Lawson approach to leveraging IT for better management of CSR. The report draws heavily from 2007 AMR research data in identifying three key trends which include greater formalization of CSR management, compliance as a driver of environmental management and more strategic use of IT for CSR management.

Based on AMR data, Lawson concludes that environmental investment dominates for manufacturers and distributors with service organisations maintaining a closer balance between social and environmental investment. AMR predict environmental investment will increase in future and philanthropy will decline in overall share.

In fact, I think the whole data set from AMR is too generalised to be of real significance here. CSR has to be understood in the specific context of the specific industry and cannot sensibly be aggregated up and split between manufacturing and services this way. For example, I reckon airlines are a good example of a service business where the environmental issue is paramount and human rights is a social issue which almost certainly trumps in risk ratings for an apparel manufacturer.

Social risk may also be a great deal more variable, dynamic and difficult to predict in terms of stakeholder expectations compared to environmental risk. I think, over the long run, social risk and public assurance will be the more difficult issue for all firms to manage and may end up making the largest call on information resources. In the short run, environmental performance management will dominate the agenda. But as industry runs up against constraints and external stakeholders become frustrated, there is likely to be an increased demand for information on the firm’s overall sustainability strategy. Stakeholders will ask for additional assurance that the constraints to further environmental performance are real and they may seek to bargain for additional performance against the economic and social dimensions of sustainability. A simple example of this might be negotiations for investment in carbon offsets having established that the firm cannot achieve further CO2 reductions in direct operations. Voila! The environmental compliance management programme has now morphed into an economic, governance and social performance issue.

The Lawson report identifies compliance as the leading driver of environmental investment.

..compliance with regulatory requirements is the leading driver, especially for manufacturing and distribution organizations. This is logical since compliance changes the scenario for an organization from a 'nice to do' to a 'need to do'.

But CSR has always been a compliance plus concept based on voluntarism. If we accept voluntarism in lieu of regulation then, by default, we accept responsibilities that must be managed beyond the realm of legal compliance. In other words, just obeying the law is hardly worth writing home about. The real value in CSR is understanding what is really not just a 'nice to do' but a 'need to do' without having a legal code alone to determine this distinction for you. The essence of this is good risk and governance management as well as a keen eye for business development in line with rapidly changing stakeholder expectations. In the global economy businesses are largely alone to figure this out. So while the study identifies legal compliance as an immediate driver, this is far from the end of the story for CSR. In fact it is just the point of departure for CSR.

There really is consensus though on the increasing importance of IT to align the mounting information requirements on CSR streaming in from all sides: from customers screening their suppliers (you), from investors, from NGOs, from employees, and so on.

What is promising here is that Lawson are stepping up to express an IT vision for how businesses can better manage CSR across enterprise systems with a coherent internal control system and accessible business intelligence. This is indeed an uncertain subject area for software developers to dare to tread and it is exciting now to see a few of the business software houses starting to exercise serious grey matter on this.