Corporate social responsibility - Looking five years forward and back  

7 January 2008:

Now is the season for predictions for the coming year. However, single year predictions are for wimps - most are simple extrapolations of existing trends which arrive at fairly predictable results. Back in 2001, I made some predictions for the next five years - how well did these stack up against the reality, and what might the next five years hold for the world of corporate social responsibility?

In the 22nd September, 2001 edition of Business Respect, I made nine predictions.

1. "There will be a growing emphasis on the quality of corporate social responsibility - not just whether you do it at all". I would argue that this was a hit, with a greater emphasis over the last five years on the measurement of impact and outcome. Benchmarks of quality process, such as the Dow Jones Group Sustainability Index and BITC's Corporate Responsibility Index have increased in rigour, and profile during the last six years. There is little credit to be gained these days through mere declarations of commitment or intent.

2. "CSR will increasingly be defined by core business issues, managed strategically across the business". A big hit this one - six years ago you could see this beginning to happen in discussion and debate. But in the intervening time, many companies have now created CSR committees which act as sub-committees of the board, and are chaired by the CEO. Across the world, CSR is now of growing importance to how businesses make their money, not just whether they give some of it away.

3. "Companies will become much more sophisticated about how they communicate with stakeholders". Partial hit - it would have been a bigger hit but for the inclusion of the word "much"! A number of companies are clearly on the quest - seeking ways of engaging direct stakeholders such as employees and customers. The implication that companies would move on from their expectation six years ago that such stakeholders would read the CSR report was certainly spot on - but the arrival at demonstrably successful alternatives is taking a while.

4. "The growing expectations on business will survive recession (and even war if need be)". As we now know, war was indeed part of the package. This prediction certainly hit the mark - although the financial slow-down that came since it was written was less severe than it might have been. It is always the fear of CSR proponents within business that a true economic crash will see this "nice to have" relegated to the back burner. But in the light of prediction number 2, it is hard now to see how that could happen. It is not a "nice to have" for most businesses, but an essential part of future success.

5. "How you downsize and what you make will become the two most significant benchmarks". Partially correct. There has been a growing focus on the product part of the equation. Downsizing, although it remains a major process that, for many businesses, involves them in negative publicity, has not been the big area of focus on the last six years it seemed it might. Offshoring has been the main focus instead - same principle, but different application.

6. "There will be a growing tension between business-led CSR and NGO demands for better globalisation." This was not seen as intuitive at the time of making - a number of the key NGOs were pro-CSR, although their definition was not the one that businesses were using. It has, however, been proved spectacularly correct. We saw Christian Aid produce "Behind the Mask, the real face of CSR" followed by other groups in the CORE coalition piling into CSR with thunderous rhetoric. We saw the NGOs attacking the outcome of the EU Multistakeholder Forum on CSR, and continuing the good fight on an ongoing basis.

7. "The business of social accountability is professionalising - there will be firmer standards in the future". Partially correct - the AA1000 series of standards has been extended and developed, and there has been a period of development and learning for those that provide assurance. But there remains a long way to go. Certainly, I think that I envisaged further progress with this prediction than has so far been achieved. If anything, there is now something of a gentle rolling back of the tide - a reaction against the assumption that all of this stuff can be put into numbers.

8. "Governments will largely refrain from legislation on CSR". Again, correct. This was by no means a foregone conclusion at the time of making - the NGOs were agitating for more laws, and the EU was at the beginning of its process of considering its position. But time and again they recognised that CSR is a process which is about initiative and best practice, not about minimum standards. One or two exceptions prove the rule, of course, such as Indonesia which added a requirement for CSR to its revision of business law. This is not an example others are queueing up to emulate.

9. "Political lobbying is a landmine waiting to explode". Wrong - at least for that six year period. We have seen political lobbying emerging as an issue, with a rash of reports focusing on it as an issue, and it has been added as a compulsory component of the Corporate Responsibility Index - but that hardly constitutes an explosion. It remains a latent issue, that will possibly emerge during the next period.

All in all, that's not a bad record from the initial predictions. What about the next five years? And the aim here, again, is to seek to identify predictions that are by no means foregone conclusions, and some of which will be highly contentious or surprising. Well, I have seven new predictions of what will happen within the world of CSR by 2013.

1. The focus for CSR will shift from the process of how things are managed to leadership actions by companies that significantly change the business environment. So, at the moment tools such as the CR Index that focus on process profliferate, and will continue so to do in the short term - but as such processes become completely standard, the focus will shift to strategic actions by individual businesses that are about leadership, vision and risk-taking - some of which will be successful and some of which won't. This does not mean that companies won't implement the process points, simply that these will become routine.

2. There will be a crisis in CSR reporting - one serious enough to pose a real challenge to its current form. It may come in the form of current leadership reporting companies challenging its value, or in the collapse of the GRI, or the creation of a significantly different alternative. It won't be a crisis that undermines the demand for information, and so it will be about adapting, simplifying or re-rationalising corporate communications, not about ending CSR reporting per se.

3. At least one current CSR champion will suffer a scandal serious enough to add weight to the CSR sceptics. We are not talking about an Enron - Enron had all the environmental and community programmes that a company might expect to have, remember - we are talking about a real CSR champion. To qualify, a company would have had to have been a sector leader for the Dow Jones or a regular award winner for its reporting or other aspects of its programmes. Why the pessimism? I just don't think that existing measures are able to tell the full story about the depth of commitment of a company - some of the champions are just not as good as we think they are. It would, of course, not be a prediction at all to state that, separate to this, there will be future business scandals. That, sadly, is so mundane as to be obvious. No, we are talking a particularly surprising calibre of company here.

4. The entry of global Chinese and Indian corporations will challenge commonly held assumptions around what constitutes a consensus in CSR. China, in particular, will continue to enter the stage bigtime. The current assumption is that, in time, Chinese companies will acquiesce to the consensus of what constitutes CSR, and that this is an entry price into corporate membership of the big boys club. I think that they will arrive with greater confidence in their own priorities and values, and will actively challenge these assumptions. They will redefine CSR and it will be an active and angry debate at times.

5. The growing expectations on business will survive the next recession, but there will be a sharper conflict with countries where people may see CSR as a barrier to trade / jobs. The economic circumstances in the next five years will be tougher than the last five, recession and the inflationary effects of higher energy and food costs. Demands for CSR will survive these, for all the reasons given for the prediction six years ago. But the new factor is going to be the growing tension now as environmentally motivated decisions impact negatively on developing country environments. Expect trouble in Africa and South America focused on jobs and trade that will target CSR approaches explicitly.

6. In five years time, corporate social responsibility will still be the most commonly used term to describe this agenda, although every year some will proclaim it to be dead. You can see one example of this in the Financial Times' predictions for 2008, for instance.

7. Two of the global leading-light CSR companies will be private equity owned firms. At the moment, private equity is seen as one of the last bastions of irresponsibility, with an assumption by many that the immensely well paid PE bosses care little for social responsibility and purely want the short term profit. On that basis, you would assume that private equity will remain in the spotlight in the next five years in a negative sense, and will be forced to make further concessions. That, however, is easy to predict. I actually think that we will be surprised by seeing real leadership and achievement here. Why? Some of the top guys are ferociously smart - and add that to a growing acquisition portfolio that includes well known public facing brands - I think they will realise that being faster and smarter on this agenda will play to their benefit, without damaging the need to create value from previously undervalued companies.

If anything, these predictions are even more challenging than the original nine - they are more specific, and often quite counter-intuitive. I stand by them, but if you choose to put money on them you do so at your own risk!

I would have added a prediction about how climate change action will have become so utterly commonplace in five years time that what is currently seen as leadership will have become minimum standard stuff - but I think that is so obvious an outcome that I wouldn't even make it a prediction.

Likewise, with my 9th prediction, that by the time we are due to review these predictions to see whether they came good, Business Respect will be approaching its 250th edition!

Source: Business Respect

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