Carving up the elephant

CSR is never going to last. It is a management fling, which will go away in a few years. It is what we have always done noes we just call it something fancy…

For most laypersons the concept of CSR is like a very big elephant that is impossible to understand the size and reach of. There seem to be no end to what is included into the realm of CSR as long as it has to do with stakeholders, ethics, the environment or any of the other labels, which are included. And if one does not understand something it is easier to dismiss it all together than try to understand what the concept brings to the table of progressive business development.

In my thinking it is about your ability to take this ever expanding and complex concept into something that can be managed and developed in an organisational setting.  The Global Compact, OECD guidelines for multinationals or the private ISO26000 are all attempts to carve up the elephant up into manageable pieces. Not that any of these approaches are flawless, but they do represent systems that business can use to manage their CSR activities and create a meaningful framework.

The important thing to think about when creating a CSR framework for business is that it has to be directly related to what the business do. So if one is in transport your effort have to be about how CSR helps you business be even better at what it does. Too many times I have seen CSR reporting and initiatives which are detached or represents a remote connection to strategies and mission.

My advise to business would be that rather than doing a half-hearted effort, it would be better to focus on areas outside CSR which brings more value such as systems for governance, quality or excellence in process management. When the business matures and internal systems can support the effort, there is a much better chance of success with systems like CSR that goes beyond the close stakeholders.

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.

Pros and cons for third-party evaluation of SRI investments

How much should you trust third party evaluation of your SRI portfolio companies? As a SRI interested investor or researcher you might want to have some their party have a look at the companies that you are investigating but how much can you really trust their evaluations? This question comes up more and more frequently as third part evaluations become much more freely available.

I have compiled a short list of issues that you might want to take a look at when evaluating if the intelligence can be used in your investigation of companies.

  1. Transparency is of cause a major concern and just because a report or paper is made from somebody outside the company it does not necessary make it more useful. It is not that third-party investigations are necessary biased but you need approach their reporting in much the same way you would corporate self-evaluation and reporting, with a fair amount of scepticism. Take a look at how they present their data and look for their source of information is if the raw material is available for your own analysis it is the best if they only present the conclusions then take it with a grain of salt.
  2. To what extend does the analysis base its conclusions on Corporate data? A lot of analysis only have corporate self-reporting as it source but might come up with very different conclusions that internal analysis came up with. What you need to do is look for triangulation of data sources. Were interviews or questioners conducted during the process, were experts included and what was their background (if it is just people from the analyst own group they might not be as reliable as other experts might be) or were data verified by other means. I recommend that you at least look for one other source of aw data other than corporate information. This will show you that some efforts were put into doing the report and some level of forensics were conducted.
  3. The analyst themselves can have a big impact on how reliable the data is. Some analysis are doing the analysis on a part time basis while others does it for a living. This does not mean that the work of the amateur cant be very valid it just means that when you evaluate technical data you might place more reliance on what the professional have to say. The person who sits with data on finances, CO2-emissions, supply and value chain data have a great deal of routine in looking at these numbers and have a good idea when they are off the mark so to speak.
  4. Standards are a big issue within CSR not just because they are evaluated against but also because they are seen as normative truths. We all know standards like the Global Compact (GC) and reporting according to Global Reporting Index (GRI) or the new ISO 26000 but just because standards are used they o not constitutes the truth. Look at them as a way to present data not as a factor for goodness. A A+ rating just not represent a higher degree of goodness than a C rating in GRI it just shows you what corporate data should be available to you for analysis.
  5. The Scope of data within CSR is constantly being debated. Some would include everything others limit their scope to just include the 10 principles in the GC. When you do your analysis you should scope what you perceive as valid data and collect sources of material that fits this scope. If you find evidence that is outside the scope but have a impact on your analysis you should put it aside for further analysis later one when the rest of your investigations have been included. This exercise will help you not only evaluate your ability to create a correct scope but also understand the complexity of your target company.
  6. Academics or not just academics. I would whish that academics could be seen as beacons of truth but the fact is that many have to make a living too and some do this by making reports for different institutions. This does not mean that it is not quality work that is being produced it just means that you can look at the reporting as you would a academic paper which have been evaluated by peers. Do not judge a report by the name on the cover.

Why does the Danish government endorse the ISO26000 scheme when it is clearly not the intent of ISO

Panorama of ISO 26000

Image via Wikipedia

According to a resent published article on Ethical Corporation it is claimed that “Rogue certification of the new sustainability standards has become a challenge for ISO” and nothing could be truer.

At the same time that the ISO 26000 standard was issued a group of policy makers, companies, CSR professionals and not least Danish Standard held a conference promoting DS26000 a certifiable standard that organizations can use to certify their CSR work. In an almost simultaneous press release from International Organisation for Standardisation (ISO) was any claim of certification deemed as in contradiction to the intend of the CR ISO26000 standard itself. The Danish Standard have subsequently revised their communication and conveniently deleted all mention of certification on their site, but this does close get the ‘cat’ back into the bag so to speak.

Ethical Corporation lists a series of issues that they believe a certification of the ISO will bring to the surface. The list includes for example that consulting firms will attempt to make a ‘quick buck’ by offering ISO 26000 certification, which is true for Denmark were Danish Standard offered this type of service. Companies will start asking their suppliers to comply with ISO 26000 as a condition to do business, businesses trying to get favorable attention from consumers by claiming compliance with ISO 26000, and governments trying to use ISO 26000 to develop a social responsibility regulation. All of these behaviors have been seen in relation to other types of ISO standards products.
The standards-setting body of ISO have made it very clear that ISO 26000 was a voluntary guidance standard, not a management system. Since it is not a management system, such as ISO 9000 or ISO 14001, it is not at least in theory be a certifiable system.

“The decision to make ISO 26000 a guidance standard instead of a certifiable system reflected the concerns of industry representatives not to overburden business with costly certification requirements.”, says Paul Hohnen, an independent sustainability consultant who participated in the ISO 26000 negotiations as a representative of the Global Reporting Initiative.

While the Danish standard DS 26000 was only at its initial phases of its marketing process others have come a long way in their efforts to top the market. Such as the Hong Kong-based certification firm Accredited Certification International started openly “awarding” ISO 26000 certification to Chinese companies and announcing their names on its website. 

The question now is what will be the next move of ISO on these rouge operators will they do as they recently claimed in a press release and revoke Danish standard and others right to certify according to ISO. Or will they just ignore these operators because the price of revoking the license will be to great even for ISO. As Robert Frost, says Robert Frost, head of communication at the ISO central secretariat in Geneva puts it “Anyone tempted into buying such a service is wasting their money and risks damaging the credibility of their organisation since ISO has made it quite clear that ISO 26000 is not a certification standard,” and he continues “At this stage, ISO is more interested in stopping the practice than in naming the culprits,”. These comments might give an indication of what ISO intend to do but for many CSR professionals, researchers or just interested stakeholders this is the time when CSR standards are being put to the test and all future standards will in some form be emulated on the basis of the outcome of this discussion.

ISO26000 certified ? Update

I have had quite a few posts on the ISO26000 standard and not least the attempts to create a certified version. I’m therefore glad to see that Ethical Corporation have taken up the story which is quickly is turning into a real scandal and a potential crisis for the ISO organization. It is not that the standard is bad or poor work it is just that the system is being used for something that it was not intended for.

You can find the article in Ethical Corporation here.