BSR and the State of Corporate Responsibility

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Last week, Business for Social Responsibility (BSR) and GlobeScan released their 7th annual State of Sustainable Business Report.

Given BSR’s impressive membership, the report, which surveyed BSR member companies to “identify common perceptions and practices of corporate sustainability professionals,” provides a one-of-a-kind overview of what major businesses across the globe think about sustainability and corporate social responsibility (CSR). It also suggests that consumers who care about CSR and sustainability could be doing a whole lot more to pressure corporations to act.

Broad data set

One of the BSR report’s chief strengths is the breadth of its data set. The group sent its survey to all 250 of its members and received responses from almost 200 (or 77 percent of its membership), yielding input from 440 sustainability professionals at what BSR calls “today’s largest and most influential multinational companies.” BSR does not disclose the actual respondents, but its membership rolls — which include companies from Anheuser-Busch, Barrick Gold, Chevron, Merck and Monsanto, to Facebook, Google, H&M, Starbucks and Walmart — suggest that BSR is not exaggerating about the size and influence of its survey-takers.

While BSR companies have a lot in common — namely their size, wealth and power — they also represent a wide range of industries, countries of origin, and (actual or perceived) commitments to sustainability. This spectrum of company experiences and philosophies makes the BSR report uniquely probative. If an issue is a priority to a majority of respondents in this survey, we can strongly conclude that it is a priority across industry and geography.

Key takeaways

So, what did the survey find? There are many interesting conclusions scattered across the 42-page report. Here are a few of the larger trends BSR identified:

  • Companies are further integrating sustainability into their businesses (almost 70 percent reported that sustainability is at least “fairly well-integrated”).
  • Sustainability is playing an increasingly important role to almost half (42 percent) of companies.
  • Human rights remains the top CSR priority across companies (68 percent called it a top priority); yet, companies are mostly failing to take meaningful steps to protect and respect human rights. The next highest-ranking priorities were workers’ rights (63 percent) and climate change (60 percent). Just a quarter of respondents indicated that poverty reduction was a top priority.
  • Most businesses outside of North America believe the upcoming international climate agreement, COP21, will impact their operations (around 70 percent of non-American companies said it was at least fairly important to their businesses); however, in North America, 55 percent said it would have, at most, “not very much” of an impact.

The devil is in the details

The report is at its most rewarding, however, when one digs beneath the surface a bit. For example:

Integration. That sustainability is being increasingly integrated into businesses is more than just anecdotal — it is supported by a variety of other data points in the report. For instance, 48 percent of companies said that their key performance indicators include sustainability measures, and 44 percent have a board committee dedicated to sustainability. Surprisingly, 15 percent of respondents said their companies have even pegged CEO compensation at least in part to sustainability goals.

Most respondents are taking real strides toward incorporating CSR and sustainability into their supply chains as well. For example, 83 percent of respondents now have supplier codes of conduct, and 68 percent “consider” sustainability in their sourcing. More impressive still: 67 percent of respondents reported regularly monitoring and auditing their suppliers, and 48 percent claimed to be training suppliers on key sustainability issues.

Motivation. Why, then, is sustainability gaining traction among the world’s largest corporations: is it altruism, or something more self-serving? Reading between the lines, it seems that companies’ movements on this issue are mostly motivated by business opportunities and/or the fear of bad press.

According to the report, reputation is by far the most important driver of sustainability efforts: 67 percent of respondents reported that it was a top-three factor, followed by operational risk at 43 percent. In addition, while a majority of respondents said an “inclusive economy” was important to growth, 44 percent admitted that this importance was driven by growth opportunities, particularly in emerging markets, and 22 percent said it was due to pressure or risk. Only 5 percent said it was due to concerns about impact of technology on workforces.

Falling short. The BSR report also highlights areas where improvement is needed. On the topic of human rights, for example, — the most common action reported by companies was simply adopting a human rights policy (70 percent). Publicly supporting the United Nations Guiding Principles on Business  and Human Rights another important, but rather insubstantial, step — was reported by just 49 percent of respondents. As for meaningful actions, only 36 percent of respondents have conducted a human rights impact assessment; only 46 percent train their employees on human rights standards; and a full 10 percent have taken no actions (at least none of those listed by BSR).

Other less than encouraging results included:

  • 21 percent reported that sustainability was not a top-10 CEO priority;
  • Almost half of companies have fewer than 10 people in the sustainability function;
  • A dismal 33 percent reported that the communities in which they operate impacted their sustainability efforts; and
  • In North America, 19 percent of respondents said their teams lacked the budgets to address climate change.

The untapped power of the consumer

Perhaps the most intriguing responses had to do with the relationship between companies, their customers and sustainability efforts. To start, companies identified consumers and customers as the stakeholder group with the largest impact on sustainability (56 percent of companies) — and it was not even close. The next highest-scoring stakeholder group was NGOs, named in 41 percent of responses.

Yet, despite this potential for impact, only 21 percent of companies reported that consumer demand was actually a driver of sustainability, and less than half believe that their customers care about their sustainability reporting.

This suggests that, while consumers may have the greatest potential to impact CSR, businesses do not feel correspondingly pressured by consumers to do more. In other words, the world’s most influential corporations have admitted that they would do more on sustainability if only their customers would demand it.

This all begs the question: Do today’s consumers really care as much about sustainability as we have been lead to believe?

In 2014, Nielsen issued a widely publicized report about today’s conscientious consumers. It ran that headline based on its finding: “Fifty-five percent of global online consumers … say they are willing to pay more for products and services provided by companies that are committed to positive social and environmental impact.” The numbers for North America and Europe, on the other hand, are 42 and 40 percent, respectively — significantly lower than the global average.

In the press release announcing Nielsen’s findings, the company’s global leader of public development and sustainability made the audacious claim that “[c]onsumers around the world are saying loud and clear that a brand’s social purpose is among the factors that influence purchase decisions.” In support, Nielsen reported that ~52 percent of purchasers “check the labeling first before buying to ensure the brand is committed to positive social and environmental impact.” Yet, Nielsen found that this was true for only 36 percent of purchasers in Europe and 32 percent of purchasers in North America.

Nielsen’s bold claims about global consumer consciousness, therefore, do little to undermine the data from the BSR report.  Consumers in Asia, South America, and the Middle East and North Africa region may feel strongly about the social responsibility of their preferred brands. But this doesn’t seem to translate to consumers in North America and Europe, where purchasing power is significantly higher.

This is a shame, particularly in light of the growing ‘sustainability information market.’  Yet, it is also emboldening.  If we as consumers really do care about corporate social responsibility and sustainable business, it turns out there’s actually something we can do about it.  We just need to speak — big business, it turns out, is willing to listen.

Michael Kourabas

Trained as a lawyer, I now focus on legal business development, corporate social responsibility (CSR), and business & human rights. My past experience includes work on complex commercial litigation, international human rights advocacy, education policy, pro bono legal representation, and analysis of CSR challenges in both the private and public sectors.

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