Paul Hohnen Sustainability Strategies

This article was published in Ethical Corporation on August 14, 2007.

From Mr PAUL HOHNEN

Corporate social responsibility on the up, but government still lags behind

Thanks to recent Summits, CSR is enjoying a good summer. But greater government and business interest will need to be followed through on if the benefits are to be realised, argues Paul Hohnen

Mark Twain once said that "reports of my death are greatly exaggerated". He might well have been referring to corporate social responsibility (CSR), which, far from being a burst bubble, is currently enjoying something of summer of love.

However one chooses to describe what CSR should be called – "corporate citizenship" being among the many candidates – support for the idea that business should do more than what is mandated is gathering momentum.

For CSR, summer 2007 was summit time. CSR featured prominently at both the G8 Heligendamm Summit, and at the UN Global Compact Leaders Summit in July. For those that missed them, here’s a quick overview.

Global Compact enjoys the spotlight...

The UN Global Compact Leaders Summit was probably the biggest and best CSR event ever. In the presence of UN Secretary-General, Ban Ki-moon, corporate leaders from around the world affirmed their commitment to the implementation of the Compact’s ten principles.

Coca Cola’s Neville Isdell summarised the views of many when he called on business to "speak up, step up and scale up" on efforts to redress global problems. Goldman Sachs released a report showing how responsible business practices were contributing to the bottom line. McKinsey & Co. also produced a report suggesting that over 90 per cent of CEOs were doing more to incorporate environmental, social and governance issues into their businesses than 5 years ago.

Summit outcomes included a "Geneva Declaration" containing a number of commitments and recommendations, and business leaders’ call for climate action. Summarising a ministerial roundtable on the role of governments, the Chair of the UN General Assembly, Sheika Haya Rashed Al Khalifa, highlighted the many ways that governments could also support responsible business practices.

While few participants did not have views about where improvements could be made to voluntary corporate initiatives, there was a shared sense of urgency and partnership that reinforced the Summit’s focus on "Facing Realities: Getting Down the Business".

... and the G8 sets a CSR agenda

For its part, the G8 was also historic. G8 governments underlined their support for the International Labour Organization’s (ILO) work, including on "the ILO core labour standards, the creation of more productive employment, further development of inclusive social protection systems and the support of social dialogue between the different stakeholders."

On labour rights, they committed to promote "decent work" and respect for the fundamental principles in the ILO Declaration, both in bilateral trade agreements and in multilateral organisations. They also agreed to work on advancing this agenda with others in the World Trade Organisation framework.

Importantly, G8 nations also committed themselves ‘to promote actively internationally agreed corporate social responsibility and labour standards’, referencing the OECD Guidelines for Multinational Enterprises MNEs) and the ILO Tripartite Declaration.

Not content with their usual role of discussing key global economic trends, and agreeing on appropriate policy responses, the Summit also made a direct appeal to third countries and the business sector. The OECD has been given the task of providing a framework for a high level dialogue with emerging economies on CSR.

That the G8 decided to appeal to business was new, and – as they noted – recognised the importance of a responsible private sector to maintaining open markets and dealing with the impacts and opportunities of globalisation.

Matching deeds with words

The Heligendamm Declaration called on the private sector to do three things in particular. These were to:

• "adhere to the principles in the OECD Guidelines for Multinational Enterprises"
• "participate actively in the Global Compact and to support the worldwide dissemination of this initiative", and
• improve "the transparency of private companies’ performances with respect to CSR". (Listed companies are invited "to assess, in their annual reports, the way they comply with CSR standards and principles").

To be helpful in this context, they offered the joint services of the OECD, ILO and Global Compact in compiling details of relevant standards.

Effective follow up on these points will not be straightforward. As the current ISO 26000 social responsibility process has discovered, reaching agreement on internationally agreed standards is not easy.

Not all government-agreed standards are widely used. Often, report of their use (not to mention impact) is not required, and therefore not well understood. Many of the most widely used CSR initiatives in the market place have been developed without government input. Is it proposed that lists of conforming companies be kept and, if so, by whom? How do governments propose to monitor the uptake of the three recommendations?

In moving to implement these decisions, a strategy will need to be developed in consultation with the business and civil society sectors. Until now, these have led the charge on CSR initiatives, and they are entitled to have mixed feelings about what increased government engagement might mean.

Some sustained high-level diplomacy will also be necessary to win agreement by India, China and the like to use the OECD framework, and allay fears of CSR being used to protect ‘green’ OECD markets.

Finally, governments will need to ensure that they and their international secretariats have the necessary resources. As things stand now, CSR staff numbers and budgets appear to be very limited. At least one test of G8 resolve will be whether additional funding is made available for the proposed work.

Twain is dead, but CSR is very much alive. As the McKinsey study anticipates, its eventual passing will probably occur as CSR issues become a normal part of everyday business.

Paul Hohnen consults, writes and speaks on CSR and sustainability issues. Mr Hohnen is a member of Ethical Corporation's advisory board and writes regularly for us on global sustainability issues. www.hohnen.net