A Conversation On Corporate Social Responsibility
In the field of corporate social responsibility (CSR), one of the true pioneers over the last few decades has been John Paluszek. His seminal books on CSR – Organizing For Corporate Social Responsibility and Will The Corporation Survive? – anticipated and accelerated the contemporary CSR and sustainable development business model. Recently, I had an insightful conversation with Mr. Paluszek, who currently is senior counsel at Ketchum specializing in CSR and sustainable development. He is also executive producer of “Business In Society,” the video program reporting and analyzing current news on these subjects and related issues.
Our conversation allowed me to tap the mind of an expert in CSR and explore where this vital field is headed in the next few years. His credentials are numerous, including serving as past chair of The Global Alliance For Public Relations and Communication Management, national past president of The Public Relations Society of America and liaison to the United Nations for those organizations.
In our talk, Mr. Paluszek identified five areas that define the future of CSR. I have built upon these ideas for this column, but the core insights are Mr. Paluszek’s.
The “natural capital” accounting dilemma and computing the environmental impact of business activity. Many organizations are beginning to consider the question: As a company, what is our share? How much should we contribute? It was in 1970 that economist Milton Friedman famously argued in the New York Times that the sole responsibility of business is to increase profits and shareholder value. But in the 34 years since, businesses have begun to take these issues much more seriously. They have begun to wonder: What is our environmental impact and how much are we accountable for?
Integrated reporting’s tipping point: Which of the hundred-plus companies working on such frameworks will best develop and present this long-term sustainability and valuation data? Just as Friedman’s clarion call ushered in the mindset that would breed the shareholder capitalism of the 1980s, the last decade has seen many important companies taking seriously the issue of value creation over time, a notion that lies at the heart of integrated reporting. What the framework includes has yet to become mainstream, however, and the coming years will likely see a tipping point in this area.
“Business For Peace” (United Nations Global Compact): Will business staples – impact investment, infrastructure, trade, jobs, anti-corruption and improved quality of life – be enough? For years, the issues of commerce have seemed completely removed from left-oriented topics defined by the peace movement. However, with groundbreaking work by business scholars such as Prof. Tim Fort (Kelley School of Business, Indiana University) on the positive correlation between commerce, peace and engagement, and with this association by the highest-level multilateral institutions such as the UN, capitalism suddenly sits side-by-side as a partner with the peace movement.
Inequality will be a driving force for new thinking about greater commitment to ethics, morality in business decisions and capitalism itself. Income inequality has grown significantly in the United States over the last three decades, as measured by the Gini Coefficient (GC). (The GC is a measure of inequality that ranges from 0-1; “0” being a society that is completely equal, and “1” being the highest level of inequality possible.) From a 20th century low of nearly .39 GC in 1968, we are now headed toward a GC of about .48. That is even above the country’s .45 GC in 1929, a historic high point until the year 2000 and later. These facts are well known among demographers and sociologists. What this distribution of wealth actually means for economic growth remains subject to debate. Conservative economists argue there is no evidence that rising inequality impedes growth; more liberal economists contend that such a great disparity is harmful to progress. The empirical literature is mixed on the topic. What is not mixed, however, is the growing popular sentiment that inequality is going to garner more and more attention in discussions about the structure of capitalism. The Occupy Wall Street movement (launched Sept. 17, 2011) endured far longer than many pundits predicted. And the conversation surrounding inequality gains greater attention today than any time since President Franklin Roosevelt famously alluded to the “forgotten man at the bottom of the economic pyramid,” in his 1932 radio address on the topic. Inequality will continue to be a critical topic for discussions about healthy economic development and growth for years to come.
- The next generation of leaders will be more socially concerned and committed as employers, consumers and investors. For concepts, ideas and movements to take hold, they must have deeper resonance than just advocacy or a loud voice carried over the media. You must also have institutional embeddedness. You must have a tie to the teaching that goes on in classrooms where the next generation of leaders is trained. In business school classrooms, students are offered courses on CSR, social accountability, leadership and corporate accountability, and authentic leadership. In extracurricular activities, we see the prominence of organizations such as NetImpact, the nonprofit looking to use the talents of business students to support social and environmental causes. This next generation of students is going to see the stewardship of organizations – as employers, consumers and investors – in a much different way than today’s leaders.
by Doug Guthrie