Thinking Ethics

Social responsibility standard

The norm ISO 26000 was published this week by the International Standards Organization to give guidance to companies and the public sector organizations as to what social responsibility means, and how to implement it.

In the area of global governance there is a real rise of "soft power" and the ISO institution is one of the leaders, as their standards are voluntary, but widely followed in quality matters, environmental protection and now social responsibility. Their standards are based on broad stakeholder input and have widespread acceptance.

The press release and a download link to the norm can be found here.

Best 100 corporate citizens - 2009

The CRO has published its 10th annual 100 Best Corporate Citizens list, and have also ensured that these companies are also the most transparent. The winners in 2009 are:

1. Brystol Myers-Squibb; 2. General Mills; 3. IBM; 4. Merck; 5. HP; 6. Cisco Systems; 7. Mattel.

Good to see such a spread over industry sectors. I guess not just one industry is leading the pack, but a number of highly qualified leaders.

They have kept their penalty box, and the residents this year are Aetna, American Express and McKesson.

Full methodology and lists plus explanations under CRO's 100 Best Corporate Citizens

Non-financial reporting: Denmark leading the pack

Denmark has just passed a new law on non-financial reporting. It is an amendment to the Danish Financial Statement Act and goes in force on January 1, 2009 and requires all large companies to have mandatory corporate social responsibility reporting on their policies and practices in their annual financial reports.

Under the new "Social responsibility for large business" law, 1'100 of the largest companies will have to include their considerations for human rights, societal, environmental and climate conditions as well as anti-corruption measures. Full article in Ethical Corporation  here.

A New Philanthropy Model

An interesting article is in the latest newsletter of The CRO.com on the Salesforce.com philanthropy model introduced by its founder, Marc Benioff. Link here. Called 1/1/1 it intends to give back to the community 1% of employee hours, 1% of the Company equity, and 1% of its products, and they hope with this to reshape philanthropy.

The idea is not new. In 1957, the Swiss food cooperative Migros introduced the cultural percent. They give one percent of sales back to the community by sponsoring or supporting cultural, society, education, hobby or economic activities. See description here.

Help, somebody?

It the wake of the subprime crisis where due to huge losses several large banks now need fresh capital, people are clamoring for more oversight. It is clear that the regulators will have to take another look and probably beef up the equity requirements. This was foreseen in the new rules of "Basle II", but some people are saying that this might be too little too late, and we might as well go to "Basle III". Be it as it may, the financial community is probably in for a low risk profile in the next months.

But the prediction for 2008 that governments will be more active in pushing for CSR in the private sector is already coming true in the first quarter. Several initiatives are under way, and if you are interested in seeing what the UN is doing about public-private partnerships, then read this article in the web version of Ethical Corporation.

The business case for sustainability - a study by Goldman Sachs

At the UN Global Compact summit, Goldman Sachs released a thorough analysis of  sustainable practices in various industries and their relationship to stock prices. The research arm of GS found that the companies that have put in place solid environmental, social and good governance policies perform better than the traditional stock market. The report (179 pages) can be accessed here. It contains excellent graphs and information on the latest research on the role of businesses in solving today's global issues.

Goldman Sachs has embraced sustainability in various ways. Their new headquarters in New York City will be a state-of-the-art green building. They are integrating the protection of the environment and the reduction of emissions in their main business (investment banking) and they have also started a think tank (Center for Enviromental Markets) to develop a better understanding of the relationship between business and social impact. 

Fourth sector

In an article entitled "Businesses try to make money and save the world" published in the New York Times, Stephanie Strom makes the point that some organizations are trying to mix social purpose and financial promise, and gives several examples of traditional companies going the responsible investment route, and several charities being more aggressive in their investments - and calls this the fourth sector.  She asks the question - are these still for-profit businesses and nonprofit fund-raising machines? I think she is on to something - we are seeing more and more of these hybrid organizations. You can't simply classify institution under government, business and non-profit anymore - there seems to be convergence with companies trying to be socially responsible and acting for the common good (companies are at different stages along this path), and non-profit institutions concentrating on efficiency and good use of funds. Pretty soon we will be seeing all kinds of rankings on both sides to measure how good they are, and how much progress they are making. So I would argue that in very short order this will no longer be the fourth sector, but the mainstream.

CSR index turns five

FTSE4Good, the index series from the London Stock Exchange, just celebrated its fifth anniversary. They measure the performance of companies that meet globally recognized corporate responsibility standards. For a review of their activity during this period click here.

Measuring the social impact of corporations

In a previous post I mentioned Do The Right Thing - a site that lets people vote on the social impact of corporations. There seems to be a conversation going on as to the value of this site, in the sense that it would create a bias towards those companies that have really good PR. More on  Marginal Revolution here. This is a tricky question, because impact might be in the eye of the beholder. I think if we define the impact as the public's perception of impact, from news published by the company, and by articles in the media (and also and especially blogs), then the real message to companies would be to communicate. And then up to the public to keep them honest - in a "say what you do - do what you say" mode.

The business of business ?

Should the business of business be more than just business ? To look at the Corporate Social Responsibility reports - several companies are making a real difference. Not only to the causes that they support, but to the engagement of their employees. Yes, some are just following the trend, but many have meaningful programs in place. This article on the BBC website talks about the salesforce.com program: they give 1% of profits (in the form of products), 1% of their employee time (amounts to about 6 days) and 1% of their equity to charity. Not a bad example to follow...