Treasures of Transformative CSR

Monday, 27 April 2015 00:00 -     - {{hitsCtrl.values.hits}}

Sustainability is surely an aspect that business leaders cannot sidestep. It was heartening to see the three days of events organised by CSR Sri Lanka featuring Dr. Wayne Visser. Having participated in his breakfast forum for CEOs and a subsequent chat, I am more convinced about the role that we need to play. Today’s column is all about that. Overview Sustainability has multiple fronts. The name sustainability is derived from the Latin sustinere meaning to “maintain”, “support”, or “endure”. Since the 1980s sustainability has been used more in the sense of human sustainability on planet Earth and this has resulted in the most widely-quoted definit ion of sustainability as a part of the concept sustainable development, that of the Brundtland Commission of the United Nations on March 20, 1987: “sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Corporate Social Responsibility (CSR) can be viewed as a form of corporate self-regulation integrated into a business model. It can be described as an organisation’s sense of responsibility towards the describe community and environment (both ecological and social) in which it operates. CSR policy functions as a self-regulatory mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards and international norms. In essence, sustainability and CSR speak of the same priorities, from the organisational point of view. Thoughts from a veteran Dr. Wayne Visser has been in Sri Lanka even before. He is Director of the think tank Kaleidoscope Futures, Founder of CSR International and Vice President of Sustainability Services for Omnex Inc. In addition, Wayne is Chair of Sustainable Business at the Gordon Institute of Business Science in South Africa, Adjunct Professor of Sustainable Development at Deakin Business School in Australia and Senior Associate at the University of Cambridge Program for Sustainability Leadership in the UK. Wayne is the author of 21 books, including Disrupting the Future (2014), CSR 2.0 (2013), The Quest for Sustainable Business (2012), The Age of Responsibility (2011) and The World Guide to CSR (2010). He is a guest columnist for The Guardian newspaper and has also published over 300 other works (chapters, articles, etc.). He has delivered more than 250 professional speeches all around the world, with his work taking him to 70 countries in the last 20 years. Evolution of CSR It was very interesting the way Dr. Visser described how CSR has evolved over a period of time. Defensive CSR in the Age of Greed is where all corporate sustainability and responsibility practices – which are typically limited – are undertaken only if and w hen it can be shown that shareholder value will be protected as a result. Hence, employee volunteer programmes (which show evidence of improved staff motivation, commitment and productivity) are not uncommon, nor are expenditures (for example in pollution controls) which are seen to fend off regulation or avoid fines and penalties. Charitable CSR in the Age of Philanthropy is where a company supports various social and environmental causes through donations and sponsorships, typically administered through a Foundation, Trust or Chairman’s Fund and aimed at empowering community groups or civil society organisations. Promotional CSR in the Age of Misdirection is what happens when corporate sustainability and responsibility is seen mainly as a public relations opportunity to enhance the brand, image and reputation of the company. Promotional CSR may draw on the practices of Charitable and Strategic CSR and turn them into PR spin, which is often characterised as ‘greenwash’. Strategic CSR, emerging from the Age of Management, means relating CSR activities to the company’s core business (e.g. Coca-Cola and water management), often through adherence to CSR codes and implementation of social and environmental management systems, which typically involve cycles of CSR policy development, goal and target setting, programme implementation, auditing and reporting. Transformative CSR in the Age of Responsibility focuses its activities on identifying and tackling the root causes of our present unsustainability and irresponsibility, typically through innovating business models, revolutionising their processes, products and services and lobbying for progressive national and international policies. Hence, while Strategic CSR is focused at the micro level – supporting social or environmental issues that happen to align with its strategy (but without necessarily changing that strategy) – Transformative CSR focuses on understanding the interconnections of the macro level system – society and ecosystems – and changing its strategy to optimise the outcomes for this larger human and ecological system. Transformative CSR holds the key to making change happen, at a societal, organisational and individual level, and ensuring that we can all make a difference. Enter CSR 2.0 Interestingly CSR 2.0 has replaced the conventional approach to CSR in creating a paradigm shift. According to Dr. Wayne, Transformative CSR represents a new holistic model of CSR. The essence of the CSR 2.0 DNA model are the four DNA Responsibility Bases, which are like the four nitrogenous bases of biological DNA (adenine, cytosine, guanine, and thymine), sometimes abbreviated to the four-letters GCTA (which was the inspiration for the 1997 science fiction film GATTACA). In the case of CSR 2.0, the DNA Responsibility Bases are Value creation, Good governance, Societal contribution and Environmental integrity. Value Creation is about more than financial profitability. The goal is economic development, which means not only contributing to the enrichment of shareholders and executives, but improving the economic context in which a company operates, including investing in infrastructure, creating jobs, providing skills development and so on. Good Governance is another area that is not new. However, Dr. Visser observes that, it has failed to be properly recognised or integrated in CSR circles. The goal of institutional effectiveness is as important as more lofty social and environmental ideals. After all, if the institution fails, or is not transparent and fair, this undermines everything else that CSR is trying to accomplish. Societal Contribution is an area that CSR is traditionally more used to addressing, with its goal of stakeholder orientation. This gives philanthropy its rightful place in CSR – as one tile in a larger mosaic – while also providing a spotlight for the importance of fair labour practices. It is simply unacceptable that there are more people in slavery today than there were before it was officially abolished in the 1800s, just as regular exposures of high-brand companies for the use of child-labour are despicable. This area of stakeholder engagement, community participation and supply chain integrity remains one of the most vexing and critical elements of CSR. Environmental Integrity sets the bar way higher than minimising damage and rather aims at maintaining and improving ecosystem sustainability. The KPIs give some sense of the ambition required here – 100% renewable energy and zero waste. We cannot continue the same practices that have, according to WWF’s Living Planet Index, caused us to lose a third of the biodiversity on the planet since they began monitoring 1970. Nor can we continue to gamble with prospect of dangerous – and perhaps catastrophic and irreversible – climate change. As Dr. Visser highlighted, CSR 2.0 also proposes a new interpretation for these terms. Like two intertwined strands of DNA, sustainability and responsibility can be thought of as different, yet complementary elements of CSR. Hence, sustainability can be conceived as the destination – the challenges, vision, strategy and goals, i.e. what we are aiming for – while responsibility is more about the journey – our solutions, responses, management and actions, i.e. how we get there. The challenge now is to admit that CSR 1.0 has failed, and to make CSR 2.0 – weaving the strands of sustainability and responsibility – into the new DNA of business. Relevance to Sri Lanka It was insightful to note the realistic assessment of CSR progress by Dr. Visser: “My starting point is to admit that CSR has failed. The logic is simple and compelling. A doctor judges his/her success by whether the patient is getting better (healthier) or worse (sicker). Similarly, we should judge the success of CSR by whether our communities and ecosystems are getting better or worse. And while at the micro level – in terms of specific CSR projects and practices – we can show many improvements, at the macro level almost every indicator of our social, environmental and ethical health is in decline.” Yet, there is no need for us to be pessimistic about the future. With the rise of CSR 2.0., an increased awareness on the need and the deeds can be seen. The questions from the audience after the presentation by Dr. Wayne, linked CSR 2.0 to the realities in Sri Lanka. I recall the prevalence of kidney diseases in the North Central Province, fierce competition impacting price that shifts the focus from CSR to cost, lack of leadership commitment as some of the thought-provoking points. It reminds me what Dr. Visser mentioned in quoting Josiah Charles Stamp: “It is easy to dodge our responsibilities, but we cannot dodge the consequences of dodging our responsibilities.” (Dr. Ajantha Dharmasiri is the Acting Director of the Postgraduate Institute of Management. He also serves as an Adjunct Professor in the Division of Management and Entrepreneurship, Price College of Business, University of Oklahoma, USA.)