The state of CSR in Canada

In our last post we commented on the No.1 position claimed by the Schulich School of Business in Toronto in the Beyond Grey Pinstripes ranking of business schools – a global survey which assesses the performance of schools in integrating responsible business into MBA curricula and research. Overall, Canadian business schools did well in the ranking with several schools making the top 50 – McGill (31st), Concordia (34th), and the University of British Columbia (49th).

But though Canadian business schools are starting to punch above their weight in the world of responsible business education, the performance of the country’s corporate sector in responsible business practice remains in question. For example, you’d be hard pressed to find any Canadian companies in the top 50 of Corporate Responsibility Officer’s Best Corporate Citizens of 2009. Still, rankings like this don’t tell you everything. So we thought we’d take the pulse of responsible business in Canada by checking out a couple of practitioner conferences taking place in downtown Toronto this last week. Clearly it is full-on conference season in Canada’s responsible business community with 3 major gatherings happening in 2 weeks – the first two of which we dipped into to test the waters.

First up was the ‘In Good Company’ CSR Conference organized by the Orenda consulting firm that took place on Tuesday 27th October 2009. This was a first-time outing for Orenda on the CSR conference circuit, and it was interesting to see the differences with some of the more mainstream conferences. We didn’t stay for the whole event but it was notable just how much the CSR agenda here was dominated by corporate community investment (CI) issues. This no doubt reflected to some extent the particular orientation of the consultancy running the show, but still, it was something of a surprise for a gig billed as a ‘CSR conference’. As Peggie Pelosi, the CEO of Orenda told us, the event was mainly aimed at engaging SMEs – and issues like CI are where most of them are with respects to CSR.

That said, the level of expertise demonstrated by the speakers on CI was pretty impressive. Clearly the leaders in Canada have been quick on the uptake in terms of developing well-managed CI programs with plenty of measurable impacts and meaningful metrics, good attention to employee involvement, and a genuine desire to both make a positive social contribution and generate greater meaning for employees. All good stuff, even with what looks like relatively limited resources compared to some of their overseas counterparts.

Strikingly missing from much of the debate however was a genuinely strategic approach to CI where firms focus their attention not just on doing good, but on leveraging their own competencies, and focusing on social problems within their own value chain or ‘sphere of influence’. Given we are in the middle of a financial crisis, and an energy situation that is rapidly heating the planet, it was somewhat disconcerting to hear a finance company talking about investments in homework clubs, tree planting and affordable home-building, whilst an energy firm regaled us with stories of their success in supporting food banks. All very laudable, and all very successful, but haven’t they got more pressing business-critical social issues they should be concentrating on? Aren’t food banks just a bit of a distraction when we’ve got climate change to solve? To be honest it was quite a relief when the Director of Corporate Citizenship at Microsoft got up and starting talking about investments in technology projects. Here was clearly a company that demonstrated that it got CSR in a deeper way.

And so it was onto the Conference Board of Canada event ‘Creating Business Value with Integrated Sustainability’ two days later. Unsurprisingly a somewhat more suited-up corporate event, but again one where, with one or two notable exceptions, the real leaders seemed to be, like Microsoft Canada over at the Orenda event, the Canadian subsidiaries of US corporations who had picked up their best tricks from over the border …. or even back in Europe. Companies like the American carpet manufacturer Interface, or even IBM, appear to be leading the pack here. And it's regulation from Europe that appears to be driving attention to environmental issues - though whether catching up with Europe's regulatory requirements is really a 'proactive' strategy, as one presenter claimed, is a moot point.

Funny how Canada manages to maintain a reputation for being all socially responsible and environmentally friendly, when corporate Canada actually seems to be dragging its feet somewhat in developing a progressive approach to responsible business. Obviously we didn’t hear everything said at either event. But from what we could gather from our admittedly brief forays into both of them, the debate here seems little more than a warmed up version of what we were hearing in the UK and other places years ago.

This is not to say there are not some impressive movers and shakers in the corporate CSR world here – but whole sectors of the economy don’t appear to have quite got it yet. The Conference Board organizers had put together a good program, but in oil and minerals rich Canada where were the energy and mining companies with something to say about ‘creating business value with integrated sustainability’? Holed up in the tar sands no doubt. Still, it was good to see consumer products companies at least starting to think seriously about green innovation issues.

So what can we conclude from our conference crawl this week? Well, let’s just say that Canada still has plenty of untapped potential when it comes to responsible business. As Peggie Pelosi acknowledged, Canadian companies are doing a pretty good job on community investment initiatives but are still well behind their overseas counterparts in sustainability and other key areas of CSR practice. As glass-half-full kind of guys, we’d like to think this means that Canada has a real opportunity to leapfrog the US, the UK and others. But we won’t be holding our breath….

Green Canada flag copyright Realc. Reproduced under Creative Commons license

How to integrate responsible business into the MBA

This week saw the release of the Aspen Institute's biennial 'alternative ranking' of business schools. Rather than the usual focus of b-school rankings on criteria like how much MBA students manage to increase their salaries by, what proportion of students get employed after graduating, or how well networked the student body is internationally, the Aspen institute looks at how well the school does in integrating social, ethical and environmental issues across its MBA curriculum and faculty research. "Our mission" they say, "is to spotlight innovative full-time MBA programs that are integrating issues of social and environmental stewardship into curricula and research."

The list of top schools includes a lot of the world's leading business schools - names such as Yale, Stanford, Michigan, and Berkeley consistently feature in the top 10. But there, right at the top, in number one spot, is our own school, the Schulich School of Business at York University. For two professors who spend day-in, day-out working on responsible business issues, this is a source of some pride for us. So we hope you'll forgive us if for a moment we bask in the reflected glory of our school's achievement, and take the afternoon off to sink a glass of celebratory champagne.

But we're not writing this blog just to boast. Well maybe we are. But what we've noticed since we've been here, and especailly in the last few days, is that along with the congratulatory messages, we've also received a lot of requests from faculty at other schools to provide insight into Schulich's secrets of success. After all the school has not been out of the top 5 since the Aspen ranking was launched in 2001. This may be our first time at no.1, but Schulich has been ranked no.3 for the last two cycles, taking us back to 2005 (before that, the ranking only grouped top schools but did not give specific placings).

So as far as we're concerned, being at the top also means we have a certain responsibility to help disseminate good practice. The Aspen Institute has traced a strong trend towards increasing integration of responsible business in business schools over the years, and part of the reason for celebrating good performance is is that it prompts others to respond and emulate these successes. B-School deans in general respond pretty well to the incentives offered by rankings, so they can be quite a force for change in the sector.

So what then accounts for Schulich's success? As relative newcomers to teh school (we joined Schulich in Jan 2007), we can't say we have all of the answers. Nor, certainly, can we claim all the credit. As it goes, we can't even claim much of the credit, which is a point we'll explain a little more in a minute. But we do have a pretty good view of what's going on here and what seems to be working (and what isn't). We've also benefited from working at other top schools in the area, especially the University of Nottingham, which is no.1 in the UK. So, here goes for a very unscientific analysis of the top 5 critical success factors for bringing responsible business into the MBA curriculum and research:

1. Start early and take the long view
Schulich started on this path way back, long before most other business schools even thought about social, ethical and environenmental issues as relevant for mainstream business education. By the time we arrived, the school was already well advanced; responsible business was widely embraced across the school, not just by a few dedicated faculty. This takes time to achieve. Success won't come overnight, however much money and other resources you throw at it.

2. Create a virtuous cycle
Related to the above is the very real fact that success in this arena breeds success. Schools that are high in the ranking attract students committed to responsible business who then demand even more courses and events - and even better ones - which keeps us constantly on our toes. Success in the Aspen rankings also attracts faculty who work on responsible business issues, who then go on to produce yet more research papers, and introduce even more specialized courses related to their own particular area. We now have almost 40 faculty members that spent at least some of their time on responsible business issues. Features like this introduce a 'built to last' competence in the area

3. Don't build a CSR ghetto
Most schools now have a centre or unit for CSR or something like that. This is great. But it can also pose a danger to real integration across the school. Sometimes it can be just a little too much fun to play in your own sand pit, and not get out there and build up competence across the entire faculty. Success in this field requires a huge team effort, not just one or two stars. At Schulich, the current ranking reflects some 162 separate MBA courses and 54 research papers during a two year period. Crane and Matten have been busy, but not that busy. So centres are good, but they have to work in a way that inspires and galvanises the school, and doesn't simply take over the CSR agenda.

4. Encourage innovation
OK, so it sounds obvious, but lots of schools are not too innovative when it comes down to it, and various systems and turf wars over the MBA curriculum can stymie real change. Faculty and students involved in responsible business are often very ambitious and entrepreneurial ... and typically have something of a mission behind them too. So they need to feel that they can start new courses and projects rathe than having to fight with administrators all the time just to get started. Give em enough room and they'll start swinging some cats for sure.

5. Gain commitment from the top
Anyone who's been involved in this field knows how important it is for senior management to be leading the agenda - this is as true for business schools as it is for businesses. At Schulich we've been lucky enough to have a Dean that is as committed to this stuff as we are. Never a speech goes by that he doesn't mention the importance of the triple bottom line and a multiple stakeholder orientation. It's an important part of the school's positioning. If you don't have that kind of support, it's going to be a whole lot tougher to get any real traction across the faculty.

We can think of a whole lot of other factors that can play a role in achieving success, but these 5 at least capture some of what we regard as the main reasons, at least here at Schulich. Of course, it helps to have resources, to be a relatively large school, and to have some decent management systems in place, too. But those can be good things to have whatever it is you want to achieve as a school. Integrating responsible business in the b-school represents a unique set of challenges. We're not saying we've got there yet; there's still a long way to go before even the schools at the top of list really get responsibility at the very heart of the MBA. But we'll worry about that next week. For now, it's time for that champagne....

Rethinking the division of labour between business and government

We liked this interview with Richard Haass in the McKinsey Quarterly where he talks about the implications of the new division of labour between and government. As he says, "the lines between what is government and what is the private sector of business will get blurred.... CEOs, when they get up in the morning and look out through their window or across their desk, they are dealing with a range of constituencies that looks an awful lot like what a cabinet member might look at." The basic ideas align pretty much with our own work on corporate citizenship and global governance, but seeing them getting such prominence from McKinsey shows just how much the whole agenda is starting to be taken seriously by the business community.

We were particularly interested in his thoughts on how companies should adapt to this 'new normal', as McKinsey likes to put it. Haass promotes a new way of thinking about business-government relations - an expanded perspective that not only thinks in terms of lobbying and political action committees, but about what the changing division of labour means for the company as a whole. As he says, we need to, "think about government and government-related issues not as something that you have a small side office [for], some vice president for government relations who maybe calls a congressional staffer when he’s got an issue. But it’s something now much more intrinsic, and every person in the company—certainly the upper echelon of leadership—needs to take this into account, needs to think very hard about what is the proper, desirable role of government for that company. ... the entire issue of government, and the division of labor between the company and government, needs to be something that is thought through from the outset."

Haass is short on specifics in the interview, but it certainly sends a clear message that we need to go further in working through what the expanded set of political responsibilities might look like. And it definitely crashes a rather large plank over the heads of most of our colleagues doing research on corporate political action who seem to simply be blind to the bigger picture of what's happening around business and politics. Dirk's article reviewing recent books by Robert Reich and Naomi Klein explains a little more where we think some of the problems are in this respect. If even the McKinsey Quarterly is getting it, surely our fellow management researchers won't be too far behind. We live in hope.

Ringing the changes at France Telecom?

Crane and Matten have both been spending time in different parts of Europe this week, and the big business ethics story of the moment here is the fall-out around the France Telecom suicides. The company has experienced some 24 suicides among its employees in the last 20 months, leading to a very public denouncement of the company's increasingly aggressive human resources policies. Many of the suicides have been accompanied by complaints or even suicide notes by the victims about extreme pressure at work, and the anxiety brought on by forced relocation, demanding targets, and insensitive management practices.

This week saw the announcement that the company's no.2, Louis-Pierre Wenes, has stepped down in response to the worsening crisis, as reported here by the BBC. Wenes had been responsible for pushing through the harsh cost cutting measures at the firm and had been widely regarded as a key architect of the new management practices at the firm, as well as the 22000 lay-offs that have befallen France Telecom employees since 2006. The company had earlier announced a moratorium on its controversial job reassignment policy.

The starkness of the personal tradegies involved is pretty much unavoidable. What can a company say when its employees are terminating themselves in the most extreme way and laying the blame directly on the work culture? Probably the worst way to handle it of course is to deny the problem and just hope it goes away, which is pretty much the strategy that France Telecom appears to have adopted before this week. Suicide is hardly an early warning signal that something is amiss in the human resource area. The company clearly should have dealt with the issues long before they bubbled up into this kind of crisis. Whatever the numbers of suicides - even if it was only a handful - there must have been a whole host of other indicators - absenteeism, poor performance, harassment etc, - that should have been picked up months if not years ago. To say, as Paul Betts does in the Financial Times, that the company simply "mishandled" the crisis, and that the government was in effect to blame for forcing the changes on the company seems woefully inadequate as an analysis of a seriously flawed ethical culture prevailing in the firm and the very real executive accountability that the firm's leaders will have to acknowledge.

Muddying the waters somewhat is the debate that has arisen around the typical suicide rate among any large number of people. Earlier suggestions by the FT that the per capita rate of suicides at France Telecom was no more than the national average seem somewhat disingenious when what we are talking about here is not simply whether this is a statistically significant number of suicides but whether the suicides have arisen from a common cause. We're not seeing anyone saying that in fact France Telecom was really a happy and friendly place to be, or that it was a successful nurturing culture that made people feel rewarded and respected. Employee suicides are just one extreme manifestation of a toxic culture - they naturally become the media story but they're not the beginning and the end of the story by any means.

Of course, all this is easy to see in hindsight ... though clearly the unions involved have been warning of problems at the company for some time - warnings that in the main have gone unheeded. You'd have thought that such a company would have been on top of the basics such as having an ethics hotline. What could be more natural for a telecoms company? As for companies watching the crisis unfold at France Telecom, they may well be sighing in relief that its not them caught in the maelstorm. The smarter ones though will be thinking its probably about time to check on the employee satisfaction ratings. The even better-prepared ones won't even need to check because they'll have been tracking them all along. There is no excuse for waiting until even one employee cracks under the pressure and takes their own life. Twenty-four is beyond any boundaries of acceptability. Whatever the stats on 'normal' rates.


Photo by Leo Reynolds. Reproduced under creative commons license

Britain's bribery shame to end?

For the past few years, we have watched with sagging spirits the abject failures of the UK authorities to get to grips with overseas bribery by British firms. It's been a real stain on the reputation of the country, its rule of law, and its businesses. With the US pressing ahead with numerous convictions under its beefed up enforcement of the Foreign Corrupt Practices Act (i.e. any firm listed in the US is liable to prosecution for bribery wherever in the world it may have occurred), Britain has become something of an international embarrassment. So much so, that at the end of last year, the former head of Transparency International UK, Laurance Cockcroft bemoaned "Britain's bribery shame".


Cockcroft's article in the magazine Ethical Corporation, written following a damning report from the OECD's working group on bribery, made the case pretty starkly:

"This extraordinarily feeble performance by the UK is regarded as symptomatic of a profound lack of commitment to addressing corruption. The report of the OECD working group suggests the UK government’s inaction is creating a situation where UK-based companies can behave with impunity in the payment of bribes to win overseas business. ... [Earlier] the OECD had raised the question of whether the UK’s failure was effectively “systemic”. This implied that the nexus of inadequate legislation, feeble prosecuting agencies and a political willingness to buckle to an ally (Saudi Arabia) made uncomfortable by a criminal investigation meant that the UK was totally unable to address corruption. This fear was quietly reinforced by the fact that in Transparency International’s corruption perceptions index, published in September this year, the UK fell from 12th to 16th place."

We've talked here before about the huge BAE scandal in the UK, and the country's decline on the TI rankings. In the new edition of our business ethics book, which is just going into production, we explore the events in even more detail. But those of you that want the 2 second overview, the bottom line is that the Serious Fraud Office was forced by the British government to cave in on its investigation of BAE's alleged millions in bribes paid to Saudi Arabian officials after heavy lobbying from the company and the Saudi government. The whole episode spoke of a huge ethical failure - and even a wrenching of the basic rule of law. As Cockcroft put it (and he was among the more reserved commentators): "Ten years ago, the international community relied on the UK to be progressive in this arena. Now, disappointment at the lack of a serious stand has turned to disbelief, and disbelief to anger."

Today though, comes news of a small but significant breakthrough, with the announcement by the SFO of its first conviction of a major British firm for overseas bribery. The firm, Mabey and Johnson, a signifant player in the world of bridge-building firm, was found to have paid bribes totalling £1m to foreign politicians and officials to secure export orders. Operated through covert middlemen, the bribes were paid to officials in a range of developing countries in Africa, Asia and the Caribbean. The SFO, learning something from its US cousins, tconcluded its first plea bargain type conviction which saw Mabey and Johnson slapped with more than £6.5m in fines and reparations to foreign governments.

This can only be good news for the beleagured SFO which only a few months ago had been left dispirited and demoralized by the BAE failure. Its head and the main BAE investigator had both left the organization soon after the government had effectively closed down their biggest ever bribery investigation. Now, media reports suggest that the new director, Richard Alderman, may be ready to push for a plea bargain at BAE too.

Today's news can only be welcomed by those of us with an interest in seeing the UK get back into the driving seat on dealing with overseas bribery. However, it will take more than one prosecution to wash away the shame of its pitiful performance over the past decade. The country's record of investigating and prosecuting bribery is still woeful in comparison to its peers – at the end of 2008, only two cases had been brought, compared with 103 in the US, 43 in Germany and 19 in France. Let's not pretend that this is because British companies are so much more honest when it comes to bribery than their contemporaries - it's more a case of them simply being able to get away with it. And realistically, only a conviction of BAE is going to change the perception of Britain as a soft-touch country, at least in the short to medium term. The SFO has little time to lose - especially if they don't want to be further embarassed by the Americans prosecuting the iconic British firm before they do. But it's still not clear if the ethics will simply get submerged by the politics again.