Apple story – Understanding your consumption

The apple story seem to continue to fascinate people and professionals. Even though that Foxconn is not only producing products for Apple that have become the all-time favorite when it comes to poor ethics management and lack of efficient control systems.

It is quite interesting that people can disregard corporate behavior if the brand of a company is strong enough. Most of my own students use Apple products and they are never surprised when I talk about the ethics record of the company. However, this knowledge does not seem to change their willingness to buy their products. Maybe because there is a wide consensus that most of the production facilities making hardware products in China are more or less branded as being in violation of Labour and Human Rights it does not hit Apple as hard. So while we know that Apple is in violation of these Rights at least we know what they are doing and at least it gives us some idea about their actions.

I received this quite informative infographic from Tony Shin, which I think highlight the case quite good. I know that some of my friends that specialize in Chines working conditions would regards some of theses issues as being quite “normal” and not really seen as a big issue inside China. However, the infrographic from Tony does give a opportunity for customers to gain knowledge about how their consumer goods are produced.

iKill
Created by: Tony Shin

People can be ethical organizations can’t

From time to time the discussion of ethics arises in the CSR debate. We would like to think that CSR is a way for organisations to conform to the norms of society and what is expected from companies in terms of behaviour. But can you really directly link ethics with CSR ?

First of all, I would like to make my position clear on what I think of ethics and its relation to organisational behaviour. People can be ethical in the way that they can distinguish between what is good and what is bad or at least most people can do so. That can make a fairly good decision on the consequences of their actions in most cultures around the world even though they have never been there before. There will of cause be differences from region to region based on cultural norms, religion, politics etc. but it would be fair to say that all cultures would not accept murder, theft, or other forms of harmful behaviour towards people.

Secondly, organisations are made up of people but this does not mean that the sum of their ethics can describe the decision making process that it goes through. Rather an organisation lets say a company, will develop it own rational for make decisions. In this case it can be profits as the raison d’etre is to make a profit for its owners, it is what one could call a fundamental condition of being a firm. So even though people might bring ethics in to their workplace it will be overruled by the condition that they have to make a profit.

This it where it becomes interesting because what CSR is trying to do is to make the organisation receptive to other conditions or the ethics of other stakeholders. Remember that stakeholders can be other organisations as well as individuals that have a stake in the actions of the firm. These stakeholders might have other raison d’etre than the firm such as reduction pollution or creating better work conditions. They might not regard profit as a very noble goal at all or they might even think that the whole concept of profit before people is an unethical condition. But with CSR the two create a platform from which that can communicate in a meaning full way. As one can not talk to an organisation like wit people so what is needed is the creation of a language that both parties can think of as meaningful and as a way that it can express its ethics through. In terms of CSR this language have become expressed through the use of systems.

CSR systems are in my mind the codification of ethics that enable organisations and stakeholders to communicate with each other in a meaningful way. With my almost 15 years around different management systems I have come to believe that the only way an organisation is effectively able to communicate with it self or with its surroundings is though the use of systems. Mind you I have used the word effectively as individual are able to communicate outside the management system but it will always less effective in relation to reaching organisational goals. Codification means that the organisation negotiate and in some cases just accept the norms which a stakeholder present. F.eks. is the ten principle in the Global Compact a codification which a large proportion of firms are willing to accept and subscribe to. Or a firm can subscribe to the code in SA8000 that communicate to stakeholders that this organisation is upholding the Human Rights, Rights of Children and ILO declarations and conventions. This does not mean that individuals can make mistakes and break the rules or that decisions can be made which are poor or bad, but like “people” this is what is to be expected.

So back to the question if you can directly link ethics to CSR. If one accept the sentence that; “people can be ethical but organisations can’t”. Then one needs to invent some form of bridge between the two that gives meaning, but at the same time accept the conditions that each must function under. For people this means the ability to distinguish between good and bad, and for organisations their raison d’etre eg. Profit (firm), knowledge (education), helping the poor (NGO?), survival (the poor), etc. Bringing these two together is done through the use of systems that enable toe codes from one stakeholder to be understood and acted upon by the other. This bridge or translation systems is continuously negotiated between the parties involved based on their individual understanding of what is good. So can you directly link ethics and CSR? Well yes if you accept that CSR is a coding system for effective communication between stakeholders that would otherwise not understand each other.

Shared value in the EU

European flag outside the Commission

EU flag

The EU has announced a new policy and some might think improved version of their CSR recommendations. The 13-page document includes a series of changes in both approach and basic assumptions on what role CSR should have. This will be the first article in a small series on the EU CSR policy the changes adopted and its possible impact.

The First change that comes to mind is the change in definition of CSR from “Corporate Social Responsibility is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.” (European Commission, 2010) into a much shorter version were CSR as “the responsibility of enterprises for their impact on society”(European Commission, 2011), which is shorter but incompact much more.

A few examples on how the new definition changes the perspective on CSR. The organisations that need to engage in CSR activities are broaden from the old “companies” to a much broader framework which encompasses “enterprises”. This broad definition is much more in line with the ISO 26000 idea that all organisations have a commitment to society. While the EU does not take the full step and included the whole definition of the ISO is a clear step in that direction. Second CSR is now both activities, which are defined by the law and those that the organisations engage in on a voluntary basis. Which indicate that adhering to the law could be sufficient to live up to the minimum standard of social engagement.

Third, the EU have taken a clear stand on what CSR should be for and as they formulate that organisations “To fully meet their corporate social responsibility, enterprises should have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the aim of:

  • Maximizing the creation of shared value for their owners/shareholders and their other stakeholders and society at large
  • Identifying, preventing and mitigating their possible adverse impacts.”

While the concept of shared value as cornered by Porter and Kramer earlier in the year have found it way into numerous CSR policies it is also a controversial concept. As it is fails to address the moral and ethical concerns that stakeholders might have with the company outside the monetary realm and is seen as an attempt to make CSR a question of profit rather than if the actions of the organisation is positive or negative. Furthermore it puts the moral responsibility on the stakeholders rather than on the organisation and its management. As a reactive concept it is up to the stakeholders to make management aware of issues and not for management them selves to be proactive in ensuring that basic rights and environmental concerns are addressed.

Storytelling at the core of corporate CSR branding

Miami Beach, Florida Hand made sign advocating...

Image via Wikipedia

The story corporate story should be at the core of any CSR effort. It is what I would call the cement that holds everything together inside the organisation and makes it possible to communicate with a degree of persuasion with its audience.

If one looks at storytelling as elements of branding one can distinguish three elements Culture, Identity and Image.

Culture being the stories that employees tell each other from the old t the new guy or among the old-timers or is the ones told in the employee magazine as examples of good cultural behaviour. It is also the informal stories that circulate among employees or close associates about how we saved the day by some act of heroism or how we beat the people from accounting at the annual summer go-card trip.  All these stories being told everyday at all levels of the organisations is building, reshaping and reinforcing corporate culture.

The Identity is what employees belie to be unique to being in just this organisation. One can call the corporate identity the reflection of the stories that is being told. One could say that they are the collective way of interpreting the stories we call our own which outsiders might not understand the fine details of. One cannot totally distinguish culture and identity from each other, as they are interlinked and always evolving. However, one can project or at least try to project ones identity on the surroundings as explicit examples of corporate culture.

This leads to Image, which are the pictures outsiders get of the organisation when it hears the corporate story being told. Stakeholders listen to the stories being told but are also taking part in its reproduction creating a mirror of the corporate image that the organisations identity can use as tool for affirming or renegotiating its culture and its feeling of being one.

In order to analyse and understand corporate storytelling one can use the actantial model developed by Greimas, which basically breaks down the story into six different but essential components.

The axis of desire, which refers to the subject or hero (who can be both good or bad) and the object, which is the thing he/she/it, desires. The axis of power that can be broken down into a helper or the person or thing that helps our hero and the opponent that is the person/thing trying to stop our hero from achieving his goal. The helper assists in achieving the desired junction between the subject and object; the opponent hinders the same.

Finally we have the axis of knowledge that is composed of the sender and the receiver. The sender is the person or thing that is requesting the establishment of the junction between our hero and the object he desires. The receiver is the element for which the quest is being undertaken.

Using this framework of understanding one could for example look at the most prominent CSR stories of 2010 the BP oil spill or the Google battle for free speech.

BP‘s oil spill in the Gulf of Mexico

Deepwater Horizon was one of the world’s largest ever oil spills, and understandably this story absolutely dominated 2010. Not only did it put a final nail in the coffin for BP’s once vaunted sustainability reputation, but it heralded a major rethink about the viability of deep sea drilling. BP didn’t cover itself in glory by failing to come up with a realistic remedy until far too late – and ended up picking up most of the tab, thereby putting paid to the usual assumption that pollution is simply an ‘externality’ of business.

Here the CSR policy of BP could be seen as a helper in telling the story that the company was trying to communicate. However, the hero or BP executive management was not able to use the help they were getting and ultimately failed to keep the BP CSR brand intact. That the power to decide if BP was allowed to win or fail in the efforts was given to the local fishermen by a combination the statements in the CSR policy and the medias efforts to find a compelling case to write about.

Google’s battle for free speech

Google’s withdrawal from China at the beginning of the year was a landmark decision in the battle for free speech on the web. A real clash of titans, no other story this year illustrated better the clash between government and big business around human rights issues.

In the Google example we have a case were the CSR policy was used successful even though the case did not come out as a commercial success for the company. When the company was challenged on its policy it stood by its values and identity and ultimately was able to prevail as a ethical brand taking a decision to withdraw from china rather than compromise its ethical standpoint. The winner becomes the Google identity and brand which is viewed its stakeholders as a company who puts people before profit.

These stories and many more show that CSR is an essential part of the corporate brand and that it is central in the story that we tell. Also that the policy is not something that corporate executive should take lightly but that it is actually a document which quite literally can help or break a company brand.

We need the NGOs as much as the entrepreneurs in the world

A kid repairs a tyre in The Gambia

Image via Wikipedia

Schumpeter said that ‘the function of the entrepreneurs is to reform or revolutionise the patterns of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing a old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry’. I will argue that the NGO have much the same function in society.

In this case I define the NGO as a relative small organisations, which is bound together with a purpose of societal change either domestically and/or internationally.

Like the entrepreneur is the function of the NGO to create new knowledge and question old habits in society. Both of them know their area of expertise much better then most and deal with the challenges of their micro-cosmos every day.

The NGO is often poorly organised and under managed but they cope with this challenge through a clearly defined mission and a sense of common purpose. And just like the entrepreneur there are plenty of challenges, which needs to be addressed administratively but gets handled through sheer footwork.

While many people in business look upon the NGOs as a pest that just makes life hard they should welcome the actor as a friend but a critical one. In business you will find plenty of people who will tell you what you want to hear but the NGO will almost certainly tell you what you should improve and were you have done wrong. I would not say to the NGO that they should partner up with business because then they loose their legitimacy and ability to be critical. But they should like the entrepreneur be welcomed at an arms length.

Business has for year scanned the market for new competitors and ideas. We all know plenty of stories about you innovative people having the business should for millions if not billions of dollars. But they would only have been able to create their brilliant designs if they were outside the corporate sphere on the inside they would only have been crushed under the weight of corporate naysayers. They thought and believed in their ideas and were willing to take a risk in pursuing their dream come true.

The NGO functions in much the same way, they are only effective if they are in opposition. If they get surrounded or encapsulated by too much structure they will only be less effective they do not exist for the sake of excising (as could be said for many other organisations) but they do so for because they want change. In business innovation it is the idea of creating something that other wants and the fulfilment of appreciation by others and for the NGO it is about making this place we live in a little bit better in the small niche were they are active.

In many countries there is a possibility for new entrepreneurs to get help in the starting phases of their project. This help is made available in order for the entrepreneur to be able to handle all the red-tape and hopefully make it possible for them to start a successful business. When they clear the first stages of creating a business plan and maybe even producing a prototype of the product they will if they are lucky be able to attract a angel or venture capitalist who will provide the funding needed in order to make the final transition from small scale to large scale production.

If we are to cope with the challenges of globalisations we need to produce organisations that will challenge the governance of the organisations on the global market. We have seen and continue to see that corporations are left with self-governance or governmentality and no stat or interstate enforcement of international proclaimed ethical or governance standards.

I have seen plenty of NGOs that have pursued the money that business can provide but through the process looses their soul and purpose as an independent observer. To me this is the very hearth blood of being a NGO is to be able to claim that they are free of close ties to private or even governmental organisations and the only reason why they can claim to be independent. If they can’t do this in a convincing manor they will have no right to criticise under the shield of the NGO banner. In my mind they would rather be names as lobbying companies who tries to influence key decision makers to see things their way, basically putting them in the same booth as tobacco, farmers, oil and weapons cartels.

My suggestion would be that we support the NGOs in their efforts to be even better just like we do for the entrepreneur. And just like the up-and-coming small business the NGO needs support in order to acquire the skills needed in order to become even better at what they do. They need to be educated and to some degree finances or at least be able to identify streams of funding which will insure their independence.

We need the NGOs critical voice in order challenge our perceptions of reality and our already established norms. Were would we have been on food safety, human rights, child labour, dangerous drugs and environmental issues if it had not been for the resilience and independence of the NGO.

The concept of Engendered CSR

The debate between different schools of thought on what gender really is has been fought for several decades (Blau & Ferber, 1986, Rosener, 1990, McCabe, 2006, Yukl, 2010:468f). Within research there are different opinions on how the behaviour of men and women should be interpreted and explained. Are gender traits to be understood to differences in biology e.g. sex or is it something that we as a society have formulated as part of some grand discourse or is it a mixture of many different contributing factors (Giddens, 1989:158, Hearn, 1998). When mapping the terrain of gender research there are several path one can take. Some researchers have shown that behaviour between primates has similarities with how human behave or the behavioural patterns are closely linked to the biological sex. In this understanding we are as humans biological predisposed for certain kinds of behaviour, which unconsciously directs us (Blau & Ferber, 1986:16f). But these arguments do not provide a framework for how to explain the behavioural patterns of homosexuals, who in many ways display behaviour which is opposed to the biological sex or leave room for social interaction that contradicts the norms contributed to the individual sex (Hearn, 1998).

While there is no doubt that there are biological differences between men and women, the reduction of traits to mere biology does not confront some of the more complex issues that organisations are faced with such as male/female adaption to change or their ability to be receptive to the signals coming from the organisations environment. The idea that the social interaction between primates and that between humans should be equivalent could seem like a long stretch, but the ideas is far from foreign in the argumentation for or against equal rights and opportunities today (Yukl, 2010:470). The biological sex perspective becomes apparent and relevant when discussing pregnancy and maternity leave in relation to career advancement or when referring to some jobs being to “though” for women to handle.

Another perspective that research has chosen to deal with gender differences is by ignoring a gender impact all together. This school of thought is especially widespread within economic theory where gender is by most schools believed to have no impact or is just ignored all together (Lorenzen, et al, 2004, Douma & Schreuder, 2004). This so-called rational approach is by far the most widespread in the business community as it reduces the complexity that a gender approach brings to understanding organisational behaviour (Blau & Ferber, 1986:3ff). However, even with this in mind the statement by Gary Powel (1990) that “Success in today’s highly competitive marketplace calls for organizations to make best use of the talent available to them. To do this, they need to identify, develop, encourage, and promote the most effective managers, regardless of sex.” is true for whatever perception one subscribes to. The ability and willingness to organise in ways that utilize the resources that are available to its full potential is nothing new in business. But realising that a gender approach could free up unrealised resources and bring new perspectives is not something which business has worked with.

The concept of Engendered CSR have been used from time to time when it comes to looking at how gender and CSR could potentially be combined in an effort to bring gender to the CSR debate. In my mind gender should play a central role in any organisations work or at least it should be integrated into the corporate strategy at a significant high level.

An engendered CSR approach would imply that business, associates gender with the performance and positive behaviour that feminine and masculine traits bring to the organisation. This means that I believe that gender do play a part in how business perform and that managers and boards can actively influence their organisational results by adopting a strategic gender approach. In essence a business case for engendering the organisation needs to be established which managers can relate to, and perceive as useful to their organisations development. This would mean that instead of adopting a rights and moral argument for working with men and women, organisations would take a strategic approach with business needs at its core. This is at least to me the central theme in the concept when combining gender research and practice with CSR.

Engendered CSR is subsequently understood as a way of thinking about the organisation as made up of men and women that in different ways bring positive and negative behaviour to the organisation and its interaction with its stakeholders, and by working strategically with these different traits organisations can influence their overall performance.

The strategic business areas that according to my own and research done by others and were gender plays a significant part or could play a central role in organisational development are.

  • Governance especially within auditing and assurance work
  • Quality recruitment
  • Positive relations with Civil Society and other stakeholder agents
  • Productivity
  • Staff turnover
  • Fraud reduction
  • Innovation
  • Supply chain management
  • Development of new markets and products
  • Financial performance
  • Stakeholder engagement

This is far from a complete list but is the areas, which are supported by some research. There is still some way to go before we can show causality between gender and these central performance areas but there is reason to think that such a link exists.

If you think that this area should be explored further and/or have ideas on research or business practice which could be used then put a comment.

How to make a CSR report

What should be in your CSR report? There are no strict guidelines out there and no universal way to put such a report together but there are some best practices, which you can draw upon in order to satisfy some of your key stakeholders. One key thing to remember is that CSR is not a Marketing or Public relations tool so it is not about showing the very best of the companies products or only about all the good you have done in the past year. The report is about showing the world that your company know that we live in an imperfect world, but that you will do your part to make it better and what you are going to do about it. Here is a quick guide to what should be in your report and why.

Introduction

Your introduction should include a statement by the CEO or Board of directors on why CSR is important to the company and how management see CSR in relation to its core business area. Remember to include information about the company, its activities and the products it is producing. You should also include a organisational chart that shows who is in charge of which area and their key responsibilities if you want to communicate transparency and openness then you should also have contact details for each person. A generic mail like csr@company.com does not do the trick. When stakeholders with a request want to know something they do not want to meet a lot of red tape. Remember in CSR communication goes both ways it is not only you that is communicating to the world you are in practice inviting the world to communicate with you.

Methodology

Show what you are reporting on and what you have excluded and why. There is nothing as bad as being caught in a lie even when you did not intend to make one. You should also show how you collect data and what degree of reliability one can put into it. If you are only getting information from your supply chain through self reporting you should state this. It is important because it makes you data less reliable then if you did your own investigations. If you have a third party participating in the data collection and/or verification it is important that you have this in this section.

Governance

How do you manage your day-to-day operations and how do you ensure that the risks that are involved are reduced as much as possible. There are plenty of tools that you can choose from when it comes to risk analysis and mediation in my experience one of to build a tool that fits the company you are working for and not a shelf product. While these can be very good they seldom fit all your needs or are to general in areas were you wanted to be specific. This is not saying that they are useless and can be a good inspiration for your work but you need to have something that works not necessary looks well. Some of the tools you can draw upon are ISO 31000, COBIT, Accounting standards like IFRS, Sarbanes-Oxley and for banks BASEL 2, the OECD principles for governance can also be a good source of information.

Most stakeholders would also like to know how the process is for handling information coming from them so make sure that you have a procedure for how information from whistleblowers, NGOs, CSOs and governmental bodies are handled.

Financial information

Some might think that financial information should be let out of CSR reporting but nothing could be more wrong. It is in the interest of most stakeholders that the company is doing well and while it is also doing good. Information on financial performance should include traditional indicators like profits, share information, turnover, etc. but also data on indicators which is normally not featured in traditional annual reports like tax information, philanthropic projects, sponsorships and the likes.

Information on what markets the company is present on and what prospects that the company sees in these markets should also be available. This is important because it will give stakeholders an insight into how the company see its future role in other markets and how it is going to handle its supply chain.

Environment, Energy and materials

If your company is producing or consuming raw materials this could be you biggest point in the report. There is an increased interest from stakeholders in knowing were from the minerals and other raw materials are coming from in their products. Lately the mobile industry have been under pressure to disclose information on their purchasing practices as some of the metals they have been using is coming from conflict areas like Congo. If there are issues, which can be of concern you should mention this even though you cant, do anything about it right now. It is better to communicate that you know that there is a potential issue than to ignore it all together. Invite other stakeholders to help you out on solving the potential problem.

Information on energy consumption and emissions should follow the guidelines that have been issued by local government that in turn is linked to the UN guidelines. This ensures that your company can be compared to others in the same industry.

Social

When it comes to the social impact of corporate activities there are several groups, which need to be paid attention to. First of all there are the employees or internal stakeholders. This group is of cause by the majority of companies regarded as the most important mainly due to the fact that they have a legitimate claim to the corporate activities and in most cases also have the relative power to back these claims up through actions such as strikes or other means of persuading management. When employees have such a prominent place in your organisation you should of cause show what you do to ensure that you live up to your commitments to them. Remember that being able to show that the company is a good place to work will attract more qualified candidates for you job opening so there is a good reason why you should do something about communicating your efforts. There are several things you can do:

  • If the company is already issuing health and safety reporting it could be a benefit to incorporate this data into a combined CSR report.
  • If you have a good working relationship with the unions you can ask them to write a page in your report. This will give the opportunity to show that the CSR report is not only a marketing/PR tool but that you actually do what you preach in terms of transparency and engagement with key stakeholders, also the ones that are critical.
  • Write about what you do to keep your employees qualified and up to date with the newest developments within your field. This communicate that you are willing to invest in your employees.
  • If you give employees voice in your CSR report make sure to say that they can say anything that they would like and that you have their title and position within the organisation in a place where it can be seen. If you only use management testimonial then you credibility will not be that big compared to when you use employees from all the organisational layers. Also keep in mind to have a even distribution of gender, age and ethnicity as well.

Human Rights

While environmental and Social issues have been on the agenda for a long time is the area of Human Rights and business a relative new area. However, with increased media and stakeholder attention coming to the area as corporate activities are stepped up in countries like China and the Middle East there are real issues of Human Rights abuse, which the company must address. For example are there no free unions in China that makes it hard to live up to the Global Compacts third principle, which dictates that companies should “uphold the freedom of association and the effective recognition of the right to collective bargaining.”

Even though that your company might not be directly in charge of or have power to change companies within the supply chain key stakeholders will hold you accountable for whatever happened in among your suppliers. There for you have to implement systems and show how you make them work that target abuses and violation of basic Human Rights with the companies that you are dealing with. The governance systems can have many names but in general they are called ‘Code of Ethics’ or ‘Code of Conduct’ and are build around the principles that you deem important in order to manage the risks that you potentially could be exposed to.

Remember that the principles around Human Rights are not just about ensuring basic rights for the people in you supply chain. But it is also about promoting the rule of law, building relationships with the local community, understanding your sphere of influence and maybe most important of all is to ‘do no harm’ in the communities you are affecting.

Perspectives

So what is the most important thing you are going to achieve in the next year? What are your goals and aspirations? These are some of the answers you have to give when you round up your report. How is it that the vision that the CEO set out to in the introduction is going to be put into practice and how is it you are going to make sure that it has been done. Like all the other activities that your business is engaged in, your CSR also have to be managed effectively in order to work and this means that you Plan – Do – Check – Act on all your indicators. You measure and hold people/managers accountable for their success.

Effective communication of your report

Ones you have finished you need to tell the world what you have done and what you plan to do in the future. I have seen hundreds of press releases that says “XXX company have now issued the sustainable report for Year XXX” this is of cause a way to tell the world but if you think about it will properly not attract that many readers. So you tell the world what you are trying to achieve instead “Company XXX is educating seamstress in its supply chain” or “Company XXX is aiming for zero emissions by 2020”. Be proud of what you are out to do and tell the world about it. If you are not you are properly doing something wrong.

Remember that there is no standard CSR report so try to be inventive and creative with your reporting but make sure that you also do your footwork and get the information in there that your stakeholders are looking for.

Good Luck