Corporate responsibility leaders will have an increasingly prominent seat at the decision-making table in 2021, so we interviewed 50 such leaders – and 20 other stakeholders, including partners, investors, Board members and more – to identify what trends are changing their roles in 2021. We published findings in our new report: “Can Capitalism Lead a More Sustainable and Equitable Recovery?”
In this article, we share the top five insights from our research. In a follow up to be published tomorrow, we will share the seven most common investments corporate responsibility leaders will make this year.
A corporate social responsibility (CSR) leader of a global technology company recently shared with us that, “CSR leaders need to pat themselves on the back for encouraging the growth of this role, but now we need to work even harder to take advantage of the opportunity for the CSR profession that has risen on account of the crises of 2020.”
CSR is not only about volunteering, community grants or raising money. It is about making your company more responsible at its core. B-Lab provides a great framework for responsible business practices by focussing on these five areas:
Governance: Ensuring that a company’s legal policies account for sustainability, equity, and a higher purpose – such as adding ESG (environmental, social and governance) metrics to board-level accountability.
Workers: Taking care of employees, including a living wage, healthcare, equity, tackling discrimination, and more – investing in more strategic community-building initiatives in all sites where employees are based.
Community: Fostering community involvement and partnership, moving beyond donations and sporadic volunteering to meaningful partnerships – and investing in more strategic community-building initiatives in all sites where employees are based.
Environment: Accounting for all emissions and environmental degradation and working towards net-zero carbon and water – including adding public reporting to consumers and investors.
Customers: Ensuring products and services actually make a meaningful and positive impact on people and other stakeholders, which adds more layers of transparency in everything that is in the product.
Companies are missing out on the “biggest business opportunity” of our time and exposing themselves to notable risk by not integrating sustainability and equity into their core strategy.
Employees want to give more, volunteer more, and expect their companies to stand up for ethical and moral issues, which includes getting involved in politics. One CSR leader of a high-growth tech company said, “Like many companies, we have gone virtual and this has proven to be a great move. That said, we are very concerned about how we can build a strong corporate culture with limited face-to-face interaction. Engaging employees in social impact activities is a key part of both how we want to share our purpose and is also a very important recruiting tool.”
Executives still view the notion of corporate responsibility as philanthropy. This “winners take all mindset” pigeon holes CSR leaders in a nearly impossible position of trying to get their company to be more responsible. Only a couple of executives, such as at brands like Starbucks and Apple, have their compensation connected to ESG targets. One CSR leader of an international direct-to-consumer marketplace shared, “We are trying to engage in meaningful conversations with our leadership about changes to our core business and operations to create less harm and include social enterprises, but the short-term ‘profit maximization’ mantra blocks us again and again and again...”
Indeed, less than 10 percent of publicly traded companies have a board committee responsible for monitoring and achieving ESG targets. One board member in the research said, “There is a growing movement around the purpose of companies that is certainly noteworthy and many of the biggest corporate executives are thinking about this. But companies are legal entities that were incorporated for a reason, and leaders need to be careful about what they stand up for. Employee populations are increasingly diverse – racially, geographically, and politically – and corporations cannot be the moral consciousness of employees. It is an important question, but it needs to be considered carefully and with consideration of long-term implications.”
Another board member said that taking a position on ESG will only harm her own reputation in a male-dominated environment, and that “Our board will not take action until there is an SEC reporting requirement.”
According to Edelman’s Trust Barometer, corporations are more trusted than nonprofits and governments. As a result, consumers and partners expect companies to be more transparent, give more to their communities, and better partner with governments and the social sector.
As one leader from a global development bank shared, “We will see more government spending, which is typically massive in size, require vendors and suppliers – and therefore their subcontractors – to report on important factors like environmental impact, gender equality, and inclusion.”
Tim Mohin, former CEO of the Global Reporting Initiative, further reinforced this point, saying, “Policymakers are increasingly requiring ESG disclosure around the world . . . And it’s likely that the incoming U.S. administration will introduce new ESG mandates as well.”
This quote from Martin Luther King, Jr. personifies the current state of CSR leaders: “The ultimate measure of a person is not where they stand in moments of comfort and convenience, but where they stand at times of challenge and controversy.” There is no doubt that those working in the CSR profession face an uphill battle of trying to make companies more responsible, even though the case for doing so is clearly published.
Nevertheless, we know that capitalism is the most powerful force on the planet, so if we can successfully integrate CSR into business, we will create a sustainable planet free from inequalities and injustices. CSR leaders agree that is something worth fighting for.
This is part one of a two-part story. You can find part two here.
Image credit: Joel Muniz/Unsplash
Mark Horoszowski is CEO at MovingWorlds, a social enterprise helping corporations develop scalable social impact programs and world-positive leaders. Mark is an RSA Fellow and also lectures on corporate social responsibility at the University of Washington.