In Denmark it is now law for the largest 1100 companies to report on social and environmental impacts, including audited verification. The Danish government has also offered incentives to companies to join the UN Global Compact or UN Principles for Responsible Investment. Is this the carrot and the stick, or should that be stick and carrot?
The French have been required to provide similar information since 2001 and here in the UK reporting has been part of the Companies Act since October last year.
In UK company law the key phrases are ‘consider with regard to’, i.e. think about, and ‘the impact of the company’s operations on the community and the environment’. It still leaves the onus on the directors to make their own ‘best judgement’ decisions without compelling a sudden transformation into a tree-hugging or regeneration charity. It’s a start but lacks teeth on its own. I can already see the stock answers to this reeled out with directors only vaguely aware when they nod approvingly at the annual meeting. Who will get to see these reports anyway? There is a great guide for UK reporting produced by the Corporate Responsibility Coalition (CORE) here.
If you’re being forced to report, you will need to measure. Reporting is the key and should be mandatory but what elements of CSR should be included? The latest revision to the AA1000 series may help move the discussion forward through the three principles of inclusivity, materiality and responsiveness. How about an easy to read CSR / Sustainability performance rating certificate (similar to white goods) for every business? Carbon footprint per employee, customer satisfaction score, community engagement criteria, financial robustness, if nothing else it would be fun to compare companies.
I’m not suggesting that every company should be required to tick every csr box. Every company is different and a ‘one size fits all’ approach would never work, but that doesn’t mean we ignore the challenge. ISO 2600 is on the way and will help but it will only be a guidance tool.
I’ll always suggest, but would never attempt to demand a private company to donate a percentage of profits to good causes. This article on Chris Jarvis’ blog about the Nigerian senator suggesting a compulsory 3.5% donation and calling it CSR is worth a read. Some may say it is a politically motivated ploy to win votes and my guess is they’d be right. It would be damaging if it wasn’t so farfetched. Philanthropy should always be voluntary. A company could possibly assist a local community much more beneficially by employing more staff that just giving away cash.
Other legislation is pushing inidivual themes within CSR. How long will it be before you are unable to get public sector contracts without an accredited environmental management system such as ISO 14001?
Can we make business better. Yes we can!