Tuesday, May 25, 2010

Should companies police for child pornography

Few issues arouse as much public condemnation as child pornography. As a visual record of child sexual abuse, its production and dissemination scars innocent lives forever. It is illegal in virtually all developed countries to produce, distribute, and receive child pornography. So despite a criminal online trade in child pornography worth billions of dollars, no legitimate company would knowingly go anywhere near the practice. But should companies play a larger role in actively stamping out child pornography? And if so, how far should they go?

Read more on our blog posting over at CSR Wire 

Photo by Za3tOoOr!. Reproduced under Creative Commons licence.

Wednesday, May 19, 2010

Climate change and the bottom line ... even in Canada?

Canada is no frontrunner in tackling climate change. In fact, in many respects, it is quite the reverse. So we were pleased to see the release of WWF Canada's report "Rethink Business How Addressing Climate Change Can Improve The Bottom Line" which looks at what some of the country's leading companies are doing to address climate change in their organizations.In fact we were so pleased that Andy agreed to write the forword for the report. Here's a sample of what he says:
"For Canadian business, the threat of climate change looms large. Nonetheless, despite its reputation as a clean, eco-loving country of verdant forestsand sparkling rivers, Canada remains a major laggard in climate protection. According to official statistics, it has one of the highest rates of per capita CO2 emissions of any country in the world. The conditions for a major change in this situation are hardly propitious either. The  economy is wedded to fossil fuels, and the federal government has been reluctant to tackle the problem of climate change through national regulation. It is clear that we need to look elsewhere for meaningful change.

Hotels, soft drinks, information technology, and paper – these might not be the obvious places to look for leadership in climate solutions in the country. However, this report demonstrates that these are indeed some of the industries where a quiet Canadian revolution is beginning to take shape. Each of the companies featured here – Fairmont Hotels & Resorts, The Coca-Cola Company, Hewlett-Packard Canada, and Catalyst Paper – have demonstrated a willingness to take a step beyond their industry rivals. They have all made an  impressive commitment to reduce absolute levels of greenhouse gas emissions. And they have each  demonstrated in their own way that doing so can also make good commercial sense. Their performance is far from perfect. But these companies can all point to significant progress that sets a benchmark for others to follow."
So the bottom line is that some of these leaders are doing some great stuff .... but there's still a long, long way to go, especially considering that these are in front of many of their competitors. If you want to read more about what these companies have done and the challenges they've faced, the whole report is downloadable for free, or you can also just download excerpts. One of the most interesting aspects for us though is that the report is based on a business collaboration implemented by WWF called Climate Savers that seeks to combine the efforts of the NGO and its corporate members to achieve meaninful carbon reductions. As Andy says in the foreword:
"The decision to take a lead on climate change is not taken lightly. WWF’s Climate Savers program, though, is a great example of what can be achieved when businesses and non-profit organizations decide to work together to achieve common goals. Such partnerships are tough to get right. Different priorities, a clash of  values, alternative ways of seeing the world: these can all derail the best-laid plans for collaboration. But  WWF Climate Savers program works because it offers a framework for action that is animated by a set of clearly articulated goals....The Climate Savers program is not just about targets, though. What Climate Savers does is provide support, advice, evaluation, and perhaps most importantly, a forum for the exchange of ideas and the communication of progress, that enables the program participants to better achieve
their goals."
We're not saying it's a panacea for tackling climate change, but challenges this big require collaborative action. And they demand a willingness to open up. And that's exactly what the Climate Savers initiative gets business in the habit of doing. It's a pity that the only way they seem able to do this is by appealing to business self-interest (as in "how addressing climate change can improve the bottom line"), but sure, there is a necessity for voluntary climate action to make some kind of commercial sense ... its just not the whole story. But if you're reading a blog about corporate responsibility, you probably didn't need us totell you that.

Tuesday, May 18, 2010

The Scandinavian Cooperative Advantage

Today we have another of our guest bloggers taking a turn on the Crane and Matten blog. Robert Strand from  Copenhagen Business School sets out why he thinks there's a distinctly Scandinavian approach to corporate social responsibility (CSR).

I had the pleasure of spending time with Andy Crane during his recent visits to the Copenhagen Business School Centre for CSR, where I am pursing my Ph.D.  Andy asked if I would share a few words about the Scandinavian approach to CSR- a topic I find so interesting that I was compelled to leave my cushy corporate job in the US to move to the heart of Scandinavia and return to the days of being a poor student.

First off, why study CSR in Scandinavia?  Well, for one, by pretty much any measure Scandinavia leads the world in strong CSR performances.  Gather up a suite of your favorite CSR indices and you are sure to find a disproportionate amount of Scandinavian companies at the top.  And given that humility is highly valued here, this is not likely the result of crafty Scandinavian spin-doctors.

So why does Scandinavia lead in CSR?  Stereotypes are a real time-saver, so allow me to indulge in a few.  It seems to be part of the Scandinavian cultural DNA for business leaders to encourage the “feminine” activities of collaboration, participation, and demonstrate far more humility than what I was accustomed to in US industry where the masculine John Wayne type was more likely to be hero-worshipped.  Here in Scandinavia, conflict is considered best solved through negotiation and compromise and as a result Scandinavian companies have built trusting partnerships with NGO’s, government agencies, and even competitors to address common social and environmental challenges.  This has led to a “Scandinavian Cooperative Advantage” (Strand 2009) that I believe will prove to be a long-term competitive advantage for the region in the face of increasingly complex social and environmental challenges that companies cannot solve alone.

IKEA offers a good example of the Scandinavian Cooperative Advantage in practice.  At a going rate of about $10 for a pint of beer, Scandinavia is not exactly a prime place to manufacture low-priced furniture.  So IKEA sources from low cost regions, which exposes them to a host of social and environmental challenges not typically known within the friendly confines of Scandinavia.  Child labor poses a particularly complex challenge, and IKEA recognized that it did not possess the competencies to deal with this alone (which took a bit of humility, don’t you think?).  Therefore IKEA formed partnerships with UNICEF and Save the Children where in collaboration with these NGO’s, the suppliers, and local communities it was determined that in most cases the children’s best interest would be served if they could continue to work for IKEA’s suppliers, however at reduced hours and with access to schools that they previously did not have. A hasty pullout by IKEA in the face of consumer boycott threats could make the situation worse for the children who may be forced into alternative forms of generating money, including prostitution.Thus as a result of IKEA’s willingness to collaborate, these children are better off and IKEA enjoys a more stable supply chain and has credible partners in UNICEF and Save the Children to vouch on its behalf in the face of consumer boycott threats.

What’s that? Oh, you noticed that I repeatedly plugged my own expression “Scandinavian Cooperative Advantage” in a shameless act of self-promotion. Keep in mind - I’m an American, not a humble Scandinavian.

You can contact Robert at rs.ikl@cbs.dk. Check out his article in the Journal of Business Ethics: Strand, R. 2009. Corporate Responsibility in Scandinavian Supply Chains.  Journal of Business Ethics.  Volume 85, Supplement 1, pp. 179-185.

Tuesday, May 4, 2010

Oil spills and externalities

What does business owe the world? OK, now that's a pretty big question. Where do you even begin to start the long list of demands and grievances that are stacking up against the corporate world? But this is the question that the Harvard Business Review has posed in a new online debate launched a week or so ago. It's a provocative starting point, and not simply (as some might have expected from HBR), an excuse to really ask 'What, if anything, does business owe the world?'.

With uncommon good timing, the debate kicked off with a lively exchange of blogs from invited contributors on the issue of externalities, and whether the internalizing of externalities - or moving from external to internal (e2i) costing of social impacts - is an appropriate expression of corporate responsibility. We say good timing because just as the first part of the debate was drawing to a close, the US began to experience one of its worst oil spills in history in the Gulf of Mexico. Now pollution is a standard example used to explain externalities - i.e. it imposes costs on those not party to the original transaction. So it is little surprise that the 'blame game' regarding responsibility for the current spill has already started. Obviously though, because this is the result of a specific accident rather than just standard run-of-the-mill everyday pollution, the questions over whether BP, the rig's owner and operator, should be held responsible are somewhat more straightforward. It should. US President, Barack Obama has said as much. In the discussion around whether firms should e2i, we need to consider social and environmental costs imposed on others from 'normal' business activity, not just accidents. So the question then becomes, should BP take responsibility for the impacts of its products (e.g. the pollution caused by burning its gasoline), for example by adopting a pricing model that accounts for the full environemntal costs of petrol.

The HBR debate seeks to tackle this question head-on. The first post is written by Chris Meyer and Julia Kirby and stems from their April HBR article arguing that companies indeed should focus on externalities. Or as they put it, "the true measure of corporate responsibility—and the key to a business’s playing its proper role in society—is the willing, constant internalization of externalities." This is nothing new in itself. A focus on externalities has been a feature of the CSR debate for some time. In fact in our CSR textbook, published a couple of years ago, we specifically identified "Internalizing or managing externalities" as one of the 6 core characteristics of CSR. So in one sense it's kind of disappointing that HBR is passing off standard business school textbook material as a "Big Idea". That said, the article (and blog) do accomplish an important task in bringing these ideas into the mainstream, and in a way that is readily digestible by executives. They also do a good job in stirring up some important debate on whether this is indeed the right way to go about CSR, and about how it can be practically accomplished.

Of course, the proposition that firms should consider e2i remains for some a distinctly controversial idea. In the HBR debate, Michael Schrage provides a lively, if slightly scatty, account of why in fact it's "the road to hell". In doing so, he makes some good points - and probably captures the understandable fears of many in the business community. But in presenting "the natural conclusion" of the e2i philosophy - that businesses become accountable for every social impact, however indirect, of their actions - his argument becomes somewhat shrill and reductionist:
"If everything is increasingly interrelated — and it is! — then who won't be aggrieved? Who won't be wounded? Who won't be disadvantaged? Who won't be harmed — or see themselves as harmed — in some meaningful way? What won't be an externality to some third party?"
Yes it's true that once you embark on a path of acknowledging some kind of responsibility for the 'side effects' or 'spillovers' of economic actions, it is difficult to determine a clear line in the sand beyond which you no longer have responsibility. But the point is that no one is saying that firms are responsible for ALL externalities, only that focusing on externalities helps identify those impacts where responsibilities are most critical, and where market mechanisms, namely pricing, can be leveraged to institutionalize that responsibility. It is intereting in fact that Schrager argues that e2i is about more government interference whereas in fact it is a market alternative to regulation. That is, rather than governments dealing with all the problems caused by economic activity, you make companies and consumers more responsible for their own actions by establishing a mechanism whereby the true costs of their activities are factored into the market price. It's no different from establishing a price for carbon, which is one of the best known recent examples of e2i pricing.

That a debate on externalities should provoke a row over government interference is perhaps not completely surprising given the orientation of HBR ... and the fact that their invited experts, for all their starry credentials, are all based in the US. It is hardly the best recipe for starting a conversation on what business owes the world (as opposed to say, what US business owes the US). Some different voices from other parts of the globe would be sure to enrich the debate (...so if that is you, then do take the opportunity to add your comments to the blogs). And you never know, with HBR's timing, by the time the debate gets to its final week's subject of "Are activists out of bounds?" we might have another very real case to discuss (... any activists reading this, now would be a great time to get "out of bounds"!)

Photo by NASA Goddard Space Flight Center. Reproduced under Creative Commons licence