Guest Author Blog: The Serious Problems of Corporate Responsibility: Definition, Goals and Measures by Carol Sanford, author of "THE RESPONSIBLE BUSINESS: Reimagining Sustainability and Success"
Every business would like to be able to say it operates responsibly. And, in fact, by the most widely accepted definition of responsibility, many do.
But, could they do more? And, aren’t they obligated to do so?
Often what we find is a dichotomy, a story of great good being done, and at the same time, great harm. Some organizations believe they are being responsible when they simply do less harm.
But, here’s my definition of The (truly) Responsible Business:The Responsible Business is one that has responsibility as a core philosophy of doing business and that affects EVERYTHING they do, EVERY action they take.
In some ways, The Responsible Business operates very much like a small town business where the owners know their customers personally, and know the families of the employees that work for them, as well as those individuals who supply them with products and services. Responsibility and accountability are woven into the very fabric of the organization. Every decision is seen through the filter of what that decision means to their constituency and stakeholders and the community in which they live. The Responsible Business measures its success against the effects it produces, and not just an internal score card of best practices and performance goals.
I have developed a framework for describing and assessing the Responsible Business.
It calls for a look at 5 domains in which a business needs to consider producing a better top line. Top line means growth and development. This goes beyond the triple bottom line. The bottom line is what is left at the end and doing less harm along the way.
The Five Domains are:
- Customer- Who we serve. Those who benefit from our products and services
- Co-creators - This refers to all the people and organizations who contribute to the creation of a product or service, from raw material suppliers to employees and contractors
- Earth- The original source and infrastructure without which human activities would be impossible.
- Community- The human inhabitants of all those places with which a business needs to partner in order to source its materials and workers, manufacture its goods, sell its products or services, and recycle or store its waste.
- Investors- The individuals and the institution without which a company’s dreams would be difficult or impossible to realize.
Using this framework, let’s take a look at some companies we’ve all heard of and see how they fare.
Google , for example, decided that they would act responsibly when they decided NOT to sell shares of stock through Goldman Sachs in what amounted to a closed system. Instead, they offered a modified Dutch auction that not only made bidding open, but allowed a tiered level of buying that enabled ordinary people to buy in. That was an exercise of responsibility for the world of investing and set an example, a way for capitalism to work effectively for someone besides the rich. And yet, Google has been questioned in regard to their human rights record by agreeing to what amounts to censorship in China. Still much work to do here, but the overall direction is good.
Coca-Cola has also made strides toward becoming a Responsible Business. They recognized the need to build strong economies and social entrepreneurial ventures into their distribution system. They were recognized by Corporate Responsibility Magazine (CFO) as one of the top CSR companies in the world for employing thousands of people to deliver sodas into extended regions in third world countries, creating opportunity for entrepreneurs who would otherwise not have a chance. This act is also created economies that are stronger and more stable. But here’s the other edge to the sword: they sold sugar products, and thus poor dental health, to more people. Again, the trend is up, but Coca-Cola still has miles to go.
Apple is one our most admired companies, and one of the smartest and most innovative. Yet they too find themselves with more work to do in the area of corporate responsibility. They have figured out how people live their daily lives and they have made us more effective and productive. Producing those effects are acts of responsibility. But Apple’s environmental record is not up to par. They have not been sufficiently good stewards of bio-regions or suppliers’ lives.
Colgate Africa, during the historic creation of the New South Africa, redesigned management systems, giving workers authority to support creation of entrepreneurial businesses in the townships through working in self-organizing teams. It built capability to govern in a democratic way by changing how it managed. And yet Colgate has done little to change its carbon footprint.
Again, more work to do in both of these cases. See a trend here?
It turns out that becoming a Responsible Business takes a strong commitment at every level of the organization, and by every person involved. Responsibility cannot be defined by pursuing practices, programs, or strategies. It is about an approach, a philosophy of doing business that is embedded in the questions people ask as they make each and every decision. What is the effect of this decision or action? How will I measure the effects to ensure I foster vitality, viability, and ability for others to be better each day, not just do no or less harm?
Think of responsibility as a Second Golden Rule. “Do unto others that which fosters what is best for all”. And get better at that every year.
Carol Sanford, author of The Responsible Business: Reimagining Sustainability and Success, which offers a practical system for building a business that sees and acts as if responsibility were a question to ask in everything, everyday for all it affects and how it can be achieved and measured.