Doing “good” also means taking hard decisions and being accountable for ones actions

Some people tend to think that if you are doing good you somehow do not have to be accountable for you actions. It would seem that it is like that ones you are “goodness industry” it is automatically a license to bypass the normal channels of communications and scientific standards. But with the growing number of stakeholders there is however an urgent need for more transparency also on the other side of the fence.
Very few of the stakeholder groups like NGOs or CSOs that I know of have a standardised method and understanding of how to report findings. Most often they god for a headline approach where what ever fits the main thesis is included in the reporting and all that contradicts will be left out. It is not that I think that they do this to be evil or that they are trying to twist the facts in a conscious way it is just that they are unaware that for anything to be true it needs to be transparent and capable of being reproduced. Unfortunately this is frequently not the case.
We often hold the most transparent companies accountable for their actions and dig into their annual and sustainability reports in order to find inconsistencies that we can explore but it rarely is the other way around. The possibility are explored that there is a discrepancy between what the company says and what they are actually doing. And when a flaw is found we make sure that everybody knows about it either through the press of using dedicated campaigns.
The Haitian earthquake disaster provides a good case for. NGOs and to some degree CSOs came under fire from locals who claimed that not enough had been done to transform temporary shelters into permanent homes, or to provide access to drinking water and sanitation services. In some camps run by NGOs, people were still dying from cholera a year after the disaster struck and by that actually doing more harm than good. Of cause it is not all NGOs that are active in Haiti that did wrong but it goes with the case that they cannot be left without some form of control and accountability for their actions.
Another example comes from Cambodia where international NGOs actively contributed to corruption, which was documented in the documentary “The Trap of Saving Cambodia”.

The film puts a spotlight on some of the troubling issues facing this country: government sponsored forced evictions; corruption on a massive scale; the underground trafficking of women and children. And maybe even as disturbing is that local NGOs with the finances of the World Bank, joined by huge donor countries are contributing to the continuation of these problems by providing access to billions of dollars in aid where most of the money is going to officials rather than to the people in need.
There are still NGOs that think the accountability is not for the “Goodness”-industry. Or as Mango a UK based NGO puts it “Research has shown that results-based management is not an effective way of managing and reporting most NGOs’ performance.” And Goes on to list why they should not held accountable for the results that hey produce. To a large extend reminding me of the discussions in the private sector in the 80 ties and 90 ties about quality management.
NGOs need to shape up if they are to continue to be the beacons of truth and uprightness that we have come to know them. They will need to shape up their processes and weed out the organisations that does not live up to the basic criteria of accountability, transparency and good governance or the whole sector will be dragged down into the mud from where it will be difficult of not impossible to escape.

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CSR as (Social) Risk Management

Some thoughts on CSR and Risk management

Effective risk management has almost from the start of CSR been part of the reasons for engagement with stakeholders (Bebbington et al, 2007). Many companies have had NGO raise problems which companies did not even know existed or had any plan for how to tackle. In other cases the companies where attacked for business practices, which where part of their core business such as when City bank was under attack for lending money to project that lead to deforestation in Latin-America (Baron et al, 2004). Here stakeholder engagement becomes essential in order to keep the brand name undamaged and most important in keeping the trust that customers has put into the company intact. There are no single success formula on how to communicate effectively with stakeholder or which ones that should be heard or which can be ignored. What is important is that companies and organisations take a stand on how to make this communication work in practice; otherwise the risks can remain unseen for long periods until the day where it becomes unmanageable for the company and turns into a real crisis. As I have described have companies like Nike implemented systems that enable them to get a feeling for what is happening in the world and how there brand is perceived, and hopefully this system will give them some warning on cases soon to emerge.

Adopting a strategy of transparency have over time proven the best assurance for companies to manage their CSR risks and more and more companies are trying to create systems so that their stakeholders can see what they are doing. By looking at the growing number of members of GC it is clear that transnational companies from around the world are using transparency or at least what appears as transparent to manage social risk issues.

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.

Does it matter that you make a buck

The Robin Hood hound.

Image via Wikipedia

It seems that there is this idea floating around that CSR should be none-for-profit endeavor. I see many stories about how CSR is changing capitalism and redefining the world of business. These stories normally originate from people who genuinely believe that business is a fundamental evil concept and it is the task of the good (normally themselves) to try to reduce its ill effects.

It seems like that the quote from Drucker, 1984 is becoming a truth in itself that “The Social Responsibility of business is to tame the dragon, that is, to turn a social problem into economic, opportunities and economic benefit, into productive capacity, into human competence, into well-paid jobs, and into wealth.”

While it is not explicitly said so there seem to be an inner conflict between being ethical and doing business. Somehow one cannot be good and at the same time make money.

To some extend it’s been businesses own fault that they have gotten such a poor reputation on their ethics record. People like Friedman who so famously claimed that “few trends (CSR) could so thoroughly undermine the very foundation of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their shareholders as possible.” The statement did not make the matter any better and for many (if not most) business people this is still thought as a universal true statement even though that time have proven them wrong in several instances.

However, time has shown that even the most hardened businessman becomes mellow when he is faced with the wrath of public opinion. Just look at BP (Oil spill), Shell (Brent Spar (I know its old but the case does deserve a place in the hall of fame), Apple (Labour rights), etc. But even though that many businesses have learned the Darwinian way forward in business ethics why is it that the small of money is still tainted with the blood of the innocent victims of capitalism. There are two sides to this story the NGO/CSO as the good guys and the business world that continue to have a self-image as being evil.

NGO and CSO professionals have a self-image of themselves as being the good guys/girls. Somehow it has become an unspoken truth that even though NGO comes with the most fare out proposals they are acting on the behalf of goodness. For example is there a NGO that have proposed a tax on all international stock trades. In essence this means that all who buy or sell stock would be taxed a certain percentage of the total amount in what they call a Robin Hood tax. The idea is that the ones that created the world economic disaster are also the ones that pay. So what will this mean? Well, it means you and I will be taxed even more. The majority of transactions are done by big institutional funds that try to the best of their ability to manage our pensions. An additional tax will mean that everybody gets less money when we retire. So instead of being a Robin Hood tax it really is an extra tax on regular hardworking people.

Furthermore such a proposal will have to cover the entire world across political, national, ethnic and religious boundaries. We can’t have countries that do not enforce a tax on transaction but we will need a worldwide tax service that will make sure that money is paid. Who is going to enforce such a police force? The US or China? Or maybe Saudi Arabia? So what the NGO propose is that we just tax the rich countries. Well who are they? Is china included? The biggest economy in the world or what about Brazil or Russia? What about Venezuela who have a huge oil economy but keep its people in poverty should they tax investments?

But because the NGO is by definition good they are not proclaimed as fools but rather as idealists. Another side of the story is the tendency of business to place NGOs on a pedestal as the incarnation of, naivety yes, but as the carriers of the “good” message. It still amazes me what business people put up with when confronted with a negative NGO. They are almost seem embarrassed that they are actually able to make a profit in their endeavors including their work on CSR. Personally I believe it is too many communication experts that guide business leaders to take all the abuse without taking the time to actually checking the facts. One of the golden rules of crisis communication is that if you want a negative story to go away you lay down as fast as possible if you keep on fighting the story will just continue to haunt you. So many business leaders take this advice and just lay flat on the ground and let unfounded accusations become universal truths.

My advice to business is STOP and THINK before you just take the hits, and when you have checked your facts then make sure that it comes out. When you know all there is to know about your business (and you know more than anybody else) then you confront your accuser live and so that you can set the record straight (of cause if you are a total fool this is properly not the best of advices I can give). I’m sure that any negative NGO that is coming after you will crumble when confronted with the depth of information that you can present.

Business should not be embarrassed that it makes money of its social responsibility efforts it is merely the logic of capitalism. You should actually be proud that you are able to be good and at the same time do well. So all you business people out there keep up the good job! and if you happen to be one of those evil capitalist who only want to exploit the world and its people all of this did not apply to you. :o)