Paul Hohnen Sustainability Strategies

This article was published in Ethical Corporation on June 12, 2007.

The G8 and responsible business: wading into CSR waters

From Mr PAUL HOHNEN

The attention given to corporate social responsibility by the recent G8 meeting marks a new level of government interest in the voluntary activities of the business sector. This is a sensible move, but questions remain, says Paul Hohnen.

It was inevitable that the issue of climate change would dominate both the discussion at - and subsequent media coverage of - the G8 Summit held at Heiligendamm.

However for anyone following the climate issue, or the G8 for that matter, the focus on emission reductions, and the need for a global approach were hardly new.

What was new and surprising, however, was the attention given by the Summit leaders in their Declaration "Growth and Responsibility in the World Economy" to corporate social responsibility (CSR). The G8's recognition of CSR was remarkable in several key respects.

Firstly, while the G8 has previously signalled its support for voluntary measures by industry, it has never before addressed the CSR issue in any detail. On this occasion not only did the Group use the term "corporate social responsibility", it put it in a clear policy context.

"Promoting and strengthening" corporate and other forms of social responsibility, Summiteers noted, was a key element in the overall strategy for promoting global investment and sustainable growth.

In this context the G8 also encouraged improved CSR reporting. Implicitly endorsing an already well-established trend, the G8 invited "the companies listed on our stock markets to assess, in their annual reports, the way they comply with CSR standards and principles".

Secondly, the Group's approach to CSR was not passive. Not only did it commit itself "to promote actively internationally agreed corporate responsibility and labour standards", it also called on the business community, emerging economies and developing countries to do so as well.

Here, it specifically identified the OECD Guidelines for Multinational Enterprises, the ILO Tripartite Declaration, and the UN Global Compact, and commended their use.

In the context of "responsibility for raw materials" the G8 also took the opportunity to reference a wide range of other CSR instruments.

Among others, these included the work of the UN Special Representative on Human Rights, the OECD Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones, the Global Reporting Initiative (GRI), the Extractive Industries Transparency Initiative (EITI), the Voluntary Principles on Security and Human Rights, the Kimberley Process, and the IFC Performance Standards.

Recognising that there was a need for "clarification of the numerous standards and principles" used in the CSR arena, the G8 asked the OECD secretariat to take action on two fronts.

One initiative will involve the compilation of the most relevant CSR standards "in order to give more visibility and more clarity" to the various standards and principles.

Perhaps as a nudge to bring the leading instruments closer together, this is to be done in cooperation with the Global Compact and the ILO. The other will be an OECD hosted platform for a "high level dialogue" on CSR with the major emerging economies.

No ISO?

The most notable omission in the declaration was a reference to the International Organization on Standardization (ISO). Given past G8 references to the importance of ISO's work, some may see the failure to reference ISO's current work in developing an international guidance standard on social responsibility as a missed opportunity.

What companies do in social and environmental issues, then, is set to attract ongoing and closer official interest.

Increased governmental engagement on CSR is welcome and overdue, as is the reference to the leading standards and principles. Although this will prove controversial, the issue of how well the voluntary actions of the private sector complement regulations is a matter of profound public interest.

How well CSR instruments function, and how well they respond to market needs, are also valid issues. How far the OECD goes in discussing these issues will be important.

It seems clear, too, that CSR cannot be pigeon-holed in the investment context. As some leading companies have found, the use of a CSR-based approach to business can play a vital role in understanding and responding to the changing business environment.

The sooner governments can fully harness and focus - by a mix of regulatory and voluntary means - the innovative and entrepreneurial power of business, the sooner we will be able to successfully address the pressing social and environmental challenges ahead.

Amsterdam-based, Paul Hohnen consults, speaks and writes on sustainability and CSR issues. www.hohnen.net

Paul Hohnen, Sustainability Strategies, Amsterdam 1017 SL, The Netherlands