Women on boards study from Cranfield School of Management

It is always a pleasure to post good news especially when it is on an area that I think is important. Women in top management and on boards have a significant positive impact on corporate governance, financial performance and stakeholder engagement.

I would like to see a gendered approach to HRM and recruitment policies being implemented as part of a strategic effort to strengthen the corporate backbone. Some of the research I have done in the area on how this can be done could actually be made to work if companies believed that corporate executives have to grown using the corporate pipeline.

Enjoy

Women on Boards six month review

Research and education gets a central position within EU CSR policy

The Earth flag is not an official flag, since ...

Earth flag

While I do have some criticism of the new EU CSR policy there are some points were I think progress have been made. And within the field of education and research there are clear signs that lessons have been learned.

“The further development of CSR requires new skills as well as changes in values and behaviour. Member States can play an important role by encouraging education establishments to integrate CSR, sustainable development and responsible citizenship into relevant education curricula, including at secondary school and university level. European business schools are encouraged to sign the UN Principles for Responsible Management Education.”

I think this quote from the policy shows that CSR have hit the mainstream vein and that it should be taken serious not only by business but also by the institutions that teach our future leaders that there is such thing as ethics and morals.

Especially London School of Economics have been accused of having a lax relationship in terms of teaching their students what is right and what is wrong. Actually to such extend that business schools had to apologize for alleged harm that students had done in the wake of the first financial crisis. So this step is definitely a step in the right direction in terms of trying to integrate moral thinking into the curriculum.

Another subject is that EU will support research and the further development of the field of research.

“High quality academic research supports the development of business practice and public policy in the field of CSR. Further research should build on the results of projects financed under the 6th and 7th EU Framework Programmes. The Commission will explore opportunities for financing further research and innovation on CSR, and supporting CSR principles and guidelines in research funded still under the 7th Framework Programme, as well as under its successor, Horizon 2020, and in building the European Research Area.”

While there are no independent money to be found it is a strong signal to send that they will continue the funding beyond the 7th framework, which will end in 2011. So all in all not all is bad with the EU CSR policy there are beacons of light out there. At least as long as they don’t give the money to prove the concept of Shared value I will be a happy camper.

Has the CSR movement really won the battle or have they lost the war?

Bank of America Tower

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In the article from the Economist from 2005 Clive Cook argued that the CSR movement have won the battle for ideas about the virtues company and not least the harts and minds of executives around the world.

As Cook put it in 2005 “CSR commands the attention of executives everywhere—if their public statements are to be believed—and especially that of the managers of multinational companies headquartered in Europe or the United States. Today corporate social responsibility, if it is nothing else, is the tribute that capitalism everywhere pays to virtue.”

And there is no doubt that CSR have made its way into almost every crack of the business process from Human Resources and employee benefits to product development and production. These seem to be no escape from CSR everywhere one goes there seem to be a big sign that boasts about how corporations in some obscure way bring good to the world. Reports are being issued, social media are bring utilized and campaigns are being run just to boast about how this company is creating shared value or is leading the fight against green house gasses.

It would seem that the CSR movement have not only got the a good grip in the tail of the business beast but that it is also able to make a good buck for itself along the way.

“The winners are the charities, non-government organisations and other elements of what is called civil society that pushed for CSR in the first place. These well-intentioned groups certainly did not invent the idea of good corporate citizenship, which goes back a long way. But they dressed the notion in its new CSR garb and moved it much higher up the corporate agenda.”

But now six years down the road and one maybe two economic crisis’s down the road it the effects have not been what Cook describes. Companies have not flogged around the charities, the NGOs or CSOs in order to create a new type of development system in the face of government cut downs. In fact there have been a tendency to streamline efforts into the main business process to search for the ever-elusive business case.

While the CSR movement had hoped that companies would come to them because they had to power to publicly humiliate them through exposure in the press and other media this has not happened. Instead business have initialised CSR as part of the conditions of doing business like it has done with marketing, lobbying, employee benefits, supply chain management, etc. One could say that in public-relations terms, their victory is total but the war on ideas was not really won by the CSR moment in the end. CSR did not change the face of corporations in any significant way. So when Cook argues that “…their opponents never turned up. Unopposed, the CSR movement has distilled a widespread suspicion of capitalism into a set of demands for action.” It is a truth with modifications it would be more accurate to say that corporations reorganised.

One can just take a quick look at some of the so-called “green” companies that have been hailed by the CSR

moment as frontrunners. Companies like BP that even adopted a green logo but ended up with a huge crisis on their hands in the Gulf of Mexico. Novo Nordisk that have been instrumental in the CSR reporting scene and the fight against diabetes that seem to go from one bribery scandal to the next on a almost continues basis or Bank of America who were in the centre of the financial crisis creating bank products that they themselves had a hard time understanding and in the end lead to the fall of several major financial institutions around the world.

And maybe it was because that they did not really believed in the idea of corporate social responsibility that they were lead astray. That “they were starting to suspect that they have been conned. Civil-society advocates of CSR increasingly accuse firms of merely paying lip-service to the idea of good corporate citizenship.” So corporate executives started to think how to make the best of it, how can I “conn” everybody back, so that was what the executives did. They might have called it something different but in reality they started to dress their unsustainable products in a think “green” coating just think of the three companies I just mentioned and the companies they have been running while at the same time doing some of the most unethical acts in corporate history.

We should not blame the companies for being what they have always been. All companies are in some way or another born out of the basic idea of greed that the owner somewhere along they way would make a buck or two from what the

company was doing. So companies continue to be build around the idea that the main interest should be to make some kind of profit from its activities. “When commercial interests and broader social welfare collide, profit comes first.” And we seemed to forget that when everything went fine and that there would be a price to pay when markets started to go downhill.

As Cook so rightful said but might not have fully realised the corporations have not changed their DNA they are still the same beast that they have always been. What we need to learn is that the state, society, the environment and business need to co-exist like everything else in the world but that we will never live in perfect harmony with each other but constantly need to keep each other accountable for our actions no matter what role we play. So when Cook says “Capitalism does not need the fundamental reform that many CSR advocates wish for. If CSR really were altering the bones behind the face of capitalism—sawing its jaws, removing its teeth and reducing its bite—that would be bad: not just for the owners of capital, who collect the company’s profits, but also for society at large.” I think that this is even more true now that it was when the word were spoken in 2005 when we really did not fear the big fundamental chang

 

es that we soon after experienced.

Private business on a leash

Business needs frames and structures that they can relate to not given control over and it is the role of the state and society to constantly provide and negotiate these in order for business to strive. Like a cage in a zoo business need to be reminded that not all animals can be give the same level of freedom no matter how cute or well dressed they appear to be. A tiger however cute is still a very deadly beast and it is the same with business no matter how well one dresses up a oil company it is still producing a product which eventually will dry out and pollute atmosphere. “Private enterprise requires a supporting infrastructure of laws and permissions, and more generally the consent of electorates, to pursue its business goals, whatever they may be.” The last thing they need to be given the key to the cage under the pretence of CSR and corporate sustainability reporting and then be left to govern themselves.

Governments and interstate institutions like the federal government in the US and European union should realise that they play an important art in creating these structures that by hindering the movement of business that actually help business being sustainable. For fare too long have governments give over power to private business for them to control and decide what was good and what was not. This has only resulted in agony and pain for the populations of the world creating huge scandals, systems without transparency and business who does not realise the consequences of their actions.

Dynamic CSR Reporting the future of stakeholder engagement – Introducing the CSR Sustainability Index

Here is an idea… What if we reported on the ability of organisations as a Corporate Citizen Live? Corporations are already evaluated on a minute-by-minute basis through the stock market so why not transfer this basic idea to the realm of CSR and Sustainability.

The idea would be to have a series of indicators on which a corporation can be evaluated through social media and other ways of interacting with their stakeholders. Some areas would have a lot of activity while others would only be changed on a weekly or monthly basis. Just like volatility on the stock market which looks at how much a certain stock is traded the indicator for sustainability would only change when somebody evaluate or leaves a comment.

Like the Flameindex that looks at poor or critical media coverage the CSR Sustainability index would look into how certain companies did on a overall sustainability agenda. But it would incorporate an extra layer which would cover the individual areas of some of the well knows measurements of sustainability and governance.

My suggestion would be to monitor individual companies on several social media channels, coupled with the company’s own PR communication, NGO reporting, College and University Students reports analysis and professional analysts evaluation of corporate performance. The idea is to cover as many of the organisational stakeholders as possible while at the same time creating an easy point of access for further analysis and investigation.

For example, if a Professional analyst raises a red flag in the area of governance in a company a further investigation by other stakeholders might uncover problems in the area of labour law and corruption within the same company. The problem area would not have been uncovered if there had not been a red flag warning in the first place in a area normally not covered in conventional sustainability reporting.

On the other hand if a company had a best practice on how to combat child labour in their supply chain this knowledge could be flagged and other organisations could learn and adapt this knowledge to their own operational practices.

The platform would of cause be web-based providing live data on the largest companies in the world who are also the most exposed to global sustainability issues. Using the Global Compact as a starting point it would be the ten guiding principles that would form the basis of the index.

Human Rights

Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights.

Principle 2: make sure that they are not complicit in human rights abuses.

(These principles could be monitored through tapping into local/global news channels were the company is active, monitoring local NGO activity, Whistleblowing on social media and own corporate reporting.)

Labour

Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;

Principle 4: the elimination of all forms of forced and compulsory labour;

Principle 5: the effective abolition of child labour; and

Principle 6: the elimination of discrimination in respect of employment and occupation.

(Labour unions could be provided with an excellent channel for reporting abuses they cant communicate through the corporate pipeline but would like to have attention on. The CSR Sustainability index would provide an up to date indicator on how the company performed right now so that action can be taken in order to remedy the issue. Under normal circumstances it could take weeks, months or even years before an issue makes the media. But though the index it would be possible to raise awareness a lot faster just because it is linked to so many other channels of communication and organised in a way that makes it possible to get a fast overview of issues of concern.)

Environment

Principle 7: Businesses should support a precautionary approach to environmental challenges;

Principle 8: undertake initiatives to promote greater environmental responsibility; and

Principle 9: encourage the development and diffusion of environmentally friendly technologies.

(Environmental reporting has been around for many years and there are several channels, which can provide information on corporate environmental performance. There is of cause the organisations own reporting, which will be important, but this information should be seen in the light of what NGO say, municipalities, news channels and whistleblowers have to say. This would create a reasonable way of evaluating a company environmental impact and if that how this measures up against the expectations of its stakeholders. In many cases we tend to look upon environmental issues disconnected from the specific industry meaning that we look upon the carbon emissions of a clothing manufacturing company measure up against a producer of computer components, but who says that this is a important factor for the stakeholders? So, the reporting should of cause reflect the expectations of the people who have the most interest in the performance of the organisation and not some universal agreed standard that tells one close to nothing.)

Anti-Corruption

Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

(One of the least transparent areas of the Global Compact and the one in my mind with the most potential. While the issue of corruption is less salient in the developed world it is a problem that affects all companies who work in an international context. The problems that corporations faced are backed by the resent publish annual report by transparency international that documents the impact of corrupt behaviour. As Huguette Labelle, Chair of Transparency International states, “During 2010 we continued to see the terrible cost of corruption. Sixty-four million more people were pushed into poverty since the financial crisis struck, according to the World Bank. Such tragedies make us ever more resolved to make a difference through our work.”. But as we all know these things are interconnected and one cannot look upon corruption without also taking into account, at least at some level, human and labour rights, environmental issues and not least education and gender. So the complexity of anti-corruption is difficult to comprehend and get a real overview of without some kind of systematic approach with the CSR sustainability Index such a platform would be provided at least in the form of information that can feed more in-depth investigations.

A think a unifying approach is appealing as I for one have a difficult time finding out what is PR, Spin and lobbyism from all the channels out there wanting my attention. I think it would also be appealing as It would provide a more “true” picture of who is really the leaders on the “goodness” market and how is just good at talking about how good they are. How would not be voted the best when some of your worst critics is on the voting panel?

How CSR Influences Buying Behaviour: Top 5

I was looking for evidence that CSR actually have an impact on consumer behavior and came across this short list of research findings. While the list is not complete and some might argue that there are severe gaps in the analysis it does give some pointers on where to begin if you are thinking about going green.

The following is a list of the world’s best research findings related to CSR and consumer buying behavior. Taken from top-tier journals such as the Journal of Marketing and the Journal of Consumer Research, these research insights help marketers and sustainability managers asses and adapt their CSR-based marketing strategies.

Know When Green Is Bad

Leila Hamzaoui Essoussi and Jonathan Linton (from the University of Ottawa) find consumers are willing to pay more for some green products but less for others. When consumers question the performance of an eco-product—in the case of re-treaded tires, for instance—companies have to prove that their eco-product performs as well as competing products. If the eco-product does not perform as well, companies should think twice about marketing it with their valuable brand name.

Put Quality First, CSR Second

Pat Auger (Melbourne Business School), Tim Devinney (University of Technology, Sydney) and colleagues show that consumers care about ethical features—as long as they don’t compromise quality or function. Assuming the shoes fit comfortably or the ink cartridge prints smoothly, three out of five people would spend more for the product that is ethically produced.

Add CSR to Innovation to Attract Customers

Xueming Luo (University of Texas) and C.B. Bhattacharya (European School of Management and

Technology) show that innovative firms engaging in CSR have more satisfied customers than innovative companies that don’t invest in CSR. And those satisfied customers pay off. For a company with a market value of roughly $48 billion, a modest increase in CSR ratings led to annual profits in subsequent years $17 million higher than organizations that didn’t actively engage in CSR.

Appeal to Herd Mentality to Prompt Green Action

Noah Goldstein (University of Chicago), Robert Cialdini (Arizona State University), and Vladas

Griskevicius (University of Minnesota) discovered how to maximize consumers’ participation in Environmental programs, with the test case of reusing hotel towels. Instead of making a “do good” appeal, they told consumers that other people in the same situation reused their towels. The researchers saw a 10% increase in the number of people reusing their towels simply by appealing to the herd mentality.

Your Reputation Precedes You

Remi Trudel (Boston University School of Management) and June Cotte (Richard Ivey Business School) find that a credible reputation enables you to charge higher prices for ethical products. In their study, consumers who respected a company’s reputation and had high expectations of the firm were willing to pay $4.67 more for Fair Trade coffee than for unethically-produced coffee. But, for companies with a poor reputation, consumers were only willing to pay $1.46 more for Fair Trade coffee than for unethical coffee.

Read more at Consumerism-Top-5