Paul Hohnen Sustainability Strategies

This article was published in Ethical Corporation on January 24, 2005.

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Can corporate social responsibility survive 2005?

Three unrelated events in 2005 could determine the future of the concept of corporate social responsibility, writes Paul Hohnen.

In a best case scenario, corporate social responsibility could play a powerful, positive role in meeting the challenge of sustainable development by helping business focus on its potential to do good, and to work with other sectors of society in what might be termed a “concerted sustainability response”.

In the worst case, however, the concept might be seen as a cynical means of passing off business-as-usual practices as new contributions to sustainable development. If this latter scenario – already expected by many non-government organisations – is confirmed by events, the CSR acronym could deepen divisions among sectors of society and come to mean the “case for swift regulation” of business.

So what are the three events, and how could they unfold?

The human rights dimensions of corporate social responsibility will be revisited early in the year with the circulation of a report by the UN High Commissioner for Human Rights.

This will attempt to summarise the responsibilities of trans-national corporations and related businesses, and identify the various tools that business can use to understand and implement inter-governmental human rights agreements.

The report is expected to be read carefully by all sectors of society to determine how far it is able to summarise existing international law without either dropping key principles or making an impossibly long list of obligations.

The latter pitfall bedevilled an effort to codify existing human rights standards applicable to business by a sub-committee of the UN Commission on Human Rights, and caused a furore in some business circles when it was released in 2003.

The question of how far it is possible to translate existing international commitments into practical tools to advance social responsibility will also be brought into sharp relief when the International Organisation for Standardisation (ISO) starts work in March on a guidance document on social responsibility.

The initiative will break new ground for ISO on at least two fronts. It will be the first time the organisation has tackled the nebulous concept of social responsibility, and the first time it has committed to engaging a wide set of social actors in the process.

While there is wide agreement that some form of ISO guidance on social responsibility could be useful in providing business with a clearer understanding of how to improve social responsibility practices in the workplace, there are deep concerns that the ISO initiative could be a Trojan Horse for a “corporate social responsibility-lite” approach.

Many non-governmental organisations and unions see the ISO process as a ploy to dilute or by-pass existing international labour, human rights and environmental standards, which they argue should be better implemented through traditional measures such as national legislation.

The ISO process, involving representatives from government, business, unions and NGOs, will test to the full the capacity of these sectors to work together. In particular, it will also expose the gap between globally agreed standards on the statute books and actual practice on the ground, and raise the question of who should be responsible for closing this gap.

Finally, the five-year high-level review of the UN Millennium Development Goals, scheduled to take place in September, will measure progress being made towards the various goals set by heads of government in 2000. This event will focus on how successful government policies have been in such areas as poverty reduction, improving access to food and clean drinking water, and ensuring environmental sustainability.

The event will undoubtedly raise awkward questions about how far the business sector can contribute to these goals without both binding targets and better incentives, but will also assess the effect that voluntary corporate responsibility measures have had to date.

The UN and ISO processes will also highlight a set of wider issues that confront the future of the corporate social responsibility concept.

Currently there is no agreed definition of corporate social responsibility, and no single institution with the mandate to develop one. As a result, corporate social responsibility can and does mean different things to different people. Moreover, there is no single process or structure to measure its success and assist its further improvement. NGOs and unions are quick to point out that if current laws on human rights and the environment are not fully implemented, there is little value in voluntary initiatives, and vague ones at that.

A further issue to be confronted is that of initiative proliferation. There are literally hundreds of different voluntary codes, standards and tools that have been developed on some aspect of environmental, human and social rights and responsibilities. Which, if any, of these should be followed?

Some of these initiatives, such as the Guidelines for Multinational Enterprises from the Organisation for Economic Co-operation and Development and the UN Global Compact, offer government-endorsed guidance on what constitutes good corporate behaviour. Others, such as the Global Reporting Initiative, have been developed through a partnership between business, unions, NGOs and other actors. Still others reflect the ideals of a smaller subset of actors on a narrower set of issues.

While a rich source of creative thinking, this proliferation of initiatives has two chronic weaknesses. First, it helps confirm suspicions that corporate social responsibility amounts to a sort of “à la carte” responsibility, where a company can pick and choose between clauses of the social contract it will respect. Second, it creates a genuine confusion for companies that are looking to understand clearly what is expected of them and to do their best to move towards shared societal goals.

Collectively, these events and developments could fundamentally challenge the fragile emerging partnership between business and society and undermine efforts to find a flexible but effective means of harnessing the positive forces of capitalism.

Ultimately, however, they will place further pressure on governments to implement their commitments on sustainable development and to ensure that the necessary mix of carrots and sticks is in place to ensure they are met.

A former Australian diplomat, Paul Hohnen is a consultant on sustainable development and CSR policy issues.
paul @ hohnen.net
www.hohnen.net