Portfolio knowledge on Corporate Social

Responsibility

Introduction
Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship or
responsible business) is a form of corporate self-regulation integrated into a business model.
CSR policy functions as a self-regulatory mechanism whereby a business monitors and ensures
its active compliance with the spirit of the law, ethical standards and national or international
norms. With some models, a firm's implementation of CSR goes beyond compliance and
engages in "actions that appear to further some social good, beyond the interests of the firm and
that which is required by law." CSR aims to embrace responsibility for corporate actions and to
encourage a positive impact on the environment and stakeholders including consumers,
employees, investors, communities, and others.

The term "corporate social responsibility" became popular in the 1960s and has remained a term
used indiscriminately by many to cover legal and moral responsibility more narrowly construed.

Proponents argue that corporations increase long-term profits by operating with a CSR
perspective, while critics argue that CSR distracts from business' economic role. A 2000 study
compared existing econometric studies of the relationship between social and financial
performance, concluding that the contradictory results of previous studies reporting positive,
negative, and neutral financial impact, were due to flawed empirical analysis and claimed when
the study is properly specified, CSR has a neutral impact on financial outcomes.CSR is merely
window-dressing, or an attempt to pre-empt the role of governments as a watchdog over
powerful multinational corporations.

CSR is titled to aid an organization's mission as well as a guide to what the company stands for
its consumers. Business ethics is the part of applied ethics that examines ethical principles and
moral or ethical problems that can arise in a business environment. ISO 26000 is the recognized
international standard for CSR. Public sector organizations (the United Nations for example)
adhere to the triple bottom line (TBL). It is widely accepted that CSR adheres to similar

principles, but with no formal act of legislation.

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CSR is about focusing on the little things

It seems odd that when corporations show their commitment to society through CSR they get the
most out of doing something about the little things. Companies that are successful looks at what
they do well and try to figures out how this impact community that they are active in, in ways
they could not imagine if they did not have the tools provided though CSR.

When reviewing the many definitions of CSR that is out there it gives little or no clue how
actually to conduct social responsibility. It would seem that if one just followed conventional
wisdom it would be hard if not impossible to satisfy even the simplest requirements given by all
these different classifications.

“The Social Responsibility refers to the obligations of businessmen to pursue those policies, to
make those decisions, or to follow those lines of action which are desirable in terms of the
objectives and values of our society.” Bowen, 1953 in Social Responsibilities of the
Businessman, which commonly regarded as the first milestone in modern CSR research and
practice.

Another more modern definition have been issued by the International Standards Organization
(ISO) through their guidance on social responsibility “Responsibility of an organization for the
impacts of its decisions and activities on society and the environment, through transparent and
ethical behavior that contributes to sustainable development, including health and the welfare of
society; takes into account the expectations of stakeholders; is in compliance with applicable law
and consistent with international norms of behavior; and is integrated throughout the
organization and practiced in its relationships.”

Both of these very fine definitions give little or no clue to what companies should actually do to
both successful in terms of profit, development and continued competitive advantage, and at the
same time being in tune with societies moral compass.

But some companies have actually done quite well trying to combine their CSR with their core
business. Just to give a few examples.

Danish Novo Nordisk has committed them to the task of “Changing diabetes” and have
successfully introduced new products like Victoza inline with their core mission statement

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The Swedish fashion company, H&M have under the statement “Conscious” has with worked to
create sustainable fashion through a comprehensive CSR system that reduces risks in their
supply chain.

Vivendi, the French telecom company, have initiated a program that promotes the safe use of the
Internet to youth.

All of these initiatives are small when it comes to the efforts that the company needs to put into
them because it is embedded in the “what we do” part of their business, but even so that have a
huge impact on their outreach to the communities they are active in.

So even though it would seem that these successful companies are focusing on the “little things”
they do represent a significant societal impact exactly for that reason.

A Measure of Success – CSR Business Intelligence

It would seem that we have been over this a thousand times before… What gets measured gets
managed. It was true when we invented TQM in the 80’ties and LEAN in the 90’ties and while
we seem to forget about basic management skills when we adopt network organization and self-
empower our employees it is still true that if you can stick a number to your performance there is
a much better chance that improvements follow close behind.

My good friend Michael Koploy have for a number of years been working with evaluation and
documentation of CSR performance. As I he has realized that with CSR comes complexity on a
scale that is mind-blowing. For TQM, LEAN and other quality management systems there were
at least boundaries that were relatively narrow outlook defined by customers, suppliers,
competitors and employees, but with CSR there are no scopes.

So how do you work with CSR data, how do you get your hands on it and how can you present it
in a way that gives meaning to decision makers and stakeholders. Michael has adopted an
approach that might work and builds on some of the fundamentals of TQM and at the same time

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takes into account that the world (and organizations with it) is always changing. Build on three
basic principles with data as “King”.

First – Automate and improve data collection to get a better picture of corporate sustainability;

Companies generate millions of data points every day and as time of progressed much of these
systems have been integrated into various systems like SAP or other Business Intelligence (BI)
structures. Finance, HR and operations have for a long time used these systems in order to
improve their processes and it is high time that CSR professionals do the same.

Second – Use analytics applications to find trends and make informed decisions;

The graphic integration that comes with advanced BI systems can prove to be even more useful
when it comes to sustainability performance. Often we see fragments of a total effort displayed
in the CSR report or through corporate announcements and newsletters. But what we really need
to specialized and specific information that is valuable to the individual stakeholder. For instance
if I’m interested in anti-corruption issues I would like to be able to access the policies related to
the issue but also audit reports and key performance indicators tracked in real time. What I do
not need is a general understanding that this or that company is working actively to reduce
corruption in its supply chain I want to know the “how”.

Third – Develop sustainability teams that are data-minded and accountable for business
decisions.

The Crap-in-Crap-out principle is of cause also applicable when it comes t CSR Data gathering,
reporting and presentation. So when data have to be managed it is done by people who know
what they are doing and not by some random employee who have little or no knowledge about a
given subject. A team approach works because it forces us to articulate our assumptions about
how the world works and enables us to be challenged on our views. Within the field of CSR
there are many opinions about what is the right thing to do and how its should be done, so

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instead of just having one person deciding a team of people agree and are accountable for the
approach.

Data is not only king when it comes to CSR it is central, but not without the right people and
approach to come with to terms with sometimes difficult to comprehend facts about the
organizations that we work with. Data and data processing can unveil truths about an
organization which calls for hard decisions and sometimes for managers to change their
perception of right and wrong. But without a common BI platform we will never get close to
realizing the knowledge that we can gain from systematic and comprehendible CSR data
approach.

Directions of the CSR movement

For the past five decades we have seen a tremendous development within the CSR movement
from a few hippies in the sixties shouting curses at Dow Chemicals to businesses build on the
idea of sustainability such as the Body shop and Starbucks. This blog is about what I think will
happen in the next few years. The list is far from complete but gives an overview of some of the
trends that will shape CSR in the coming years.

Codes of conducts as a “license to operate”. Code of conducts was, a few years ago, seen as a
source of competitive advantage, and to some businesses a method to organize its philanthropic
efforts. Today they are seen as something that most international businesses have as part of their
normal business approach and more a given than an extra feature. Even companies like
A.P.Møller-Maersk that until recently did almost nothing within sustainability is now
implementing Codes of Conduct and have become member of the Global Compact.

Moving from a fragmented approach to CSR companies now work strategically with
philanthropy and stakeholder engagement/management. As described by Porter and Kramer
there are real advantages to be gained by working strategically and long-term with the company’
philanthropic activities (Porter & Kramer, 2002). And companies are using philanthropy to gain
access to students and other important resources that they will need for their future growth.
Apple computers have successfully engaged with university students as part of their strategy,

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which has moved the company from being marginalized in the market to be directly comparable
with Microsoft.

The further evolution of sustainable and social risk management into real tools for business.
Where companies engaged with stakeholders because they represented a business risk they
would in the future also be part of business development. Globalization have meant that business
have expanded its scope and reach significantly. Fuelled by waves of liberation in developing
and emerging markets have initiated a significant increase in contact with countries and regions
that can be categorized as difficult to do business in. The increased sphere of contact and
influence have spread to every coroner of the world and is to a large extend fuelled by the
prospect of high returns, first mover advantages and market shares (Haufler, 1997, Mehmet,
1999, Banfield et al., 2003, Gouldbourne, 2003,

Jamali & Mirshak, 2010). According to the World Bank some 1,5 billion people are affected by
organized violence or conflicts (World Bank, 2012), this number constitute roughly one fifth of
the total population of the world making it one of the world’s biggest social issues. Conflicts are
present in all parts of the world and have a direct or indirect impact on the lives of everybody on
the planet either through social ties or as part of our professional lives. For people who are
directly affected it is an ever-present threat that invades all activities and decision making
processes, for the societies involved it puts social lives and development in a state of suspended
animation. To a large extend the issues that business needs to confront are outside what can be
considered the norm within traditional risk management strategies (RMS) because the issues are
socially embedded and complex (Holzman et al, 2003). As seen in the case with Starbucks NGO
and companies can work together on areas of common interest and create new products and
services (Austin & Reavis, 2004).

Social responsible investments or SRI will become more and more influential on driving
investment decisions and thereby the choices of management. It is not argued that investment
companies will become more social conscious but customers like institutional investors will
become more and more concerned about how they are growing their portfolios (Hawken, 2004).
This will not happen because they suddenly become aware that they have a significant social or
environmental impact but that the customers of instructional investors are starting to wonder how
their pensions are growing.

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The raise of the corporate citizen. The idea of corporate citizenship was first seen a few decades
ago (Crane & Matten, 2010). The idea of corporations as citizens with obligations and rights
really saw its emergence with several big international finance scandals such as scandal around
Enron and Arthur Anderson around the turn of the century. The idea of a corporate citizen comes
from the notion that companies like people have an obligation to the community they are part of.
This means that they are obliged to behave in accordance with ethical norms formulated by
society. In many ways the corporate citizen come from the idea of engagement with salient
stakeholders and acting in accordance with their expectations and wishes. While there are many
companies that claim corporate citizenship a very have moved beyond mere rhetoric.

The inter-linkage between CSR and development studies. Will further develop and as we will see
in this book gender will be one of the lessons learned from the field of development studies that
will define corporate behavior in the years to come. For decades development practitioners have
known that economic growth, democratization and security does not happened in a vacuum and
that development a sustainable business climate is linked to society and governance structures.
As companies increasingly becomes global even at very early stages of business lifecycle so does
the issues that they have to confront. But as older companies have had time to cope with different
cultures and business environments young entrepreneurs does not have the same privilege. In
essence this means that they will have to experience a much steeper learning curve of they are
going to survive on the global marketplace. The tools that have been refined through years of
development studies will be an integrated part of creating a sustainable business platform for the
future.

Since the 80’ties have seen large-scale privation of traditional state enterprises in areas like
transportation, communication, healthcare, energy and infrastructure. Mostly influenced by
neoliberal thinking in United Kingdom and United States were large-scale privatisation programs
were implemented under Margret Thatcher and Ronald Reagan (Bhagwati, 2007:98, Harvey,
2005:57ff). As this happened private business also found its way into areas traditionally
controlled by the state and as time have progressed more and more areas have seen either total
takeover by private business as we have seen in telecommunication, part privatization with
majority state ownership as with railroads or private companies in direct competition with or as a

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alternative to state institutions as we have seen in Healthcare and Private security companies
(Harvey, 2005, Dicken, 2003, Klein, 2000, Friedman, 2007).

The concept of CSR have found it’s way into the business world largely due to the weakening of
the state and as a result of pressure by stakeholder groups to act as information have been more
widely available from even the most remote part of the world. Word like ‘Sweatshop’ and ‘child
labor’ would not have found its way into everyday language if it had not been for the increased
transparency and persistence of stakeholders who have come forward within the last two
decades.

CSR and Partnerships

One of the more resent developments within the field of CSR has been the emergence of
strategic partnerships. Ever since the start of business there have been different forms of
partnerships from small business franchises to large-scale outsourcing. In the last decade there
have been emergences of other forms of partnerships such as business and governmental
institutions and in the last few years between Business and NGOs. While the first form of
partnership is relative unproblematic as it is assumed that both parties have similar end goals in
their efforts to maximize return on investment it is another case for the two last forms of
partnership.

Business and Governmental partnerships have been seen in areas were both parties could see
synergies. This could be in cases were companies wanted to explore markets in developing
countries but needed support in-order to get a foothold in the market. In both Sweden and
Denmark business partnerships are promoted by governmental development agencies like SIDA
Business-4-Devlopment and DANIDA Business-2-Business programs.

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CSR as Supply Chain management

One area where CSR stakeholder engagement/management has been very effective is in
managing corporate supply chains. For most businesses but especially for retail, the supply chain
can be very comprehensive and might include several tiers before arriving at the primary supplier
(Halldorson et al, 2007:286). In a CSR context the supply chain represent a unique set of
challenges as it stretches the moral responsibility of the corporation outside its direct sphere of
influence. It has been proven time and time again that even though the company might not have
direct management control they are still held accountable for the decisions made in their supply
chain both up and downstream (Austin & Reavis, 2004, Baron et al, 2004).

Effective supply chain management encompasses much more than just CSR issues but the idea
of sustainable supplier relationships are becoming increasingly important. Where time, quality
and price used to be the drivers for the logistics chains more and more companies are finding out
that the “how” of production and transportation is on the “radar”. The question of how goods are
produced and transported becomes most salient when companies start to source into areas where
different management cultures, labor laws or governance practices are in place. Issues that
companies in one part of the world take for granted is something that people need to fight for in
other places. The challenge then becomes how to manage this diversity over a string of different
supplier and customer relationships. A common approach adopted to manage supply chain is
using Code of Conduct to gain some form of control over the suppliers (Vogel, 2008). Even
though it is far from a foolproof system it does present a platform from which the company can
get an overview and thereby a possibility to manage its organizational risks in its supply chain.
For retail businesses a systematic system of information gathering, risk analysis and auditing is
essential and will always have to be a cornerstone of CSR efforts.

CSR as (Social) Risk Management

Effective risk management has almost from the start of CSR been part of the reasons for
engagement with stakeholders (Bebbington et al, 2007). Many companies have had NGO raise
problems which companies did not even know existed or had any plan for how to tackle. In other

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cases the companies where attacked for business practices, which where part of their core
business such as when City bank was under attack for lending money to project that lead to
deforestation in Latin-America (Baron et al, 2004). Here stakeholder engagement becomes
essential in order to keep the brand name undamaged and most important in keeping the trust that
customers has put into the company intact. There are no single success formula on how to
communicate effectively with stakeholder or which ones that should be heard or which can be
ignored. What is important is that companies and organizations take a stand on how to make this
communication work in practice; otherwise the risks can remain unseen for long periods until the
day where it becomes unmanageable for the company and turns into a real crisis. As I have
described have companies like Nike implemented systems that enable them to get a feeling for
what is happening in the world and how there brand is perceived, and hopefully this system will
give them some warning on cases soon to emerge.

Adopting a strategy of transparency have over time proven the best assurance for companies to
manage their CSR risks and more and more companies are trying to create systems so that their
stakeholders can see what they are doing. By looking at the growing number of members of GC
it is clear that transnational companies from around the world are using transparency or at least
what appears as transparent to manage social risk issues.

CSR as Standards and Reporting

Stakeholder engagement and some of the events leading up to the tendency for businesses and
organizations to look beyond clients and suppliers. But in order to be effective a systematic
approach is needed that will enable organizations to categorize and absorb the knowledge gained
from a more outgoing approach.

Other forms of stakeholder engagement can come through compliance and reporting on the
corporations’ ability to conform to certain standards. There are many good reasons why
corporations engage on compliance strategies. The main arguments are:

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 Stamp of approval through accreditation
 Attractiveness to social responsible investors, and
 Branding the company as a social responsible member of the community (Locke et
al2006:1f).

Initiatives such as Global Compact (GC), Global Reporting Initiative (GRI) or the supplementary
Principles for Responsible Investments (PRI), enables companies to increase their transparency
level (United Nations Global Compact, 2008, UNEP Finance Initiatives, 2005, Global Reporting
Initiative, 2006). Some of these initiatives are sponsored by the United Nations (UN) and thereby
giving companies that abide to the standards, a stamp of approval from a world recognized
institution. Other standards organizations are private or semi-governmental institutions that have
created systems for governing sustainable behavior as for example systems issued by the
International Organization for Standardization [1].

Systems can also be grouped by industry or be customized to the individual company where they
are called Code of Conduct or similar systems. Common for Codes of Conduct are that they in
some form are linked to universal agreed treaties such as the human rights, labor standards or
environmental agreements. There are, however, some drawbacks in relying too heavily on these
systems. A company like e.g. Nike has adopted a comprehensive Code of Conduct system of
standards and control which both rely on internal and external auditing, but has found that this
does not safeguard the company from criticism on labor standards in its supply chain (Locke et
al, 2006). The lessons learned from Nike is that standards and systems should not stand alone but
should be complimented by other forms of stakeholder engagement such as joint training with
suppliers and frequent meeting activities both formal and socially to increase cultural exchange
between the parties (Locke & Romis, 2006).

The second driver for stakeholder engagement can be the access to social responsible investors.
While only a few years ago the Social Responsible Investments (SRI) constituted a fraction of
the total investment portfolio it was in 2008 representing investments of over 18 trillion USD
(UNEP Finance Initiatives, 2005). For many companies it can be a benefit to be part of a SRI
portfolio as it gives access to funds that other companies might not have access to. In addition,

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the system of control and auditing can enable the company to streamline its processes and get rid
of organizational risk that might affect long-term profitability. Investigations into the link
between profitability and CSR shows that companies that rate their CSR effort positively also
have a significant better financial performance than companies that does not (Economist,
2008:6).

The third reason for adopting a compliance strategy is the potential for positive branding. The
GC is now consisting of approximately 5000 companies (United Nations Global Compact, 2008)
from around the world. Grouping with other well-branded businesses who subscribe to the GC
standard can boost their corporate brand and increase the collective brand value of all. Other
companies use CSR actively to differentiate themselves in an otherwise competitive market.

CSR as Stakeholder engagement a short intro

Stakeholder engagement is central to the evolution of CSR. The debate is centered around: how
or if stakeholders need to be managed? And if so, how or when you choose to communicate with
them? (Reich, 1998, Vogel, 2005). For most companies a broad approach to stakeholder
engagement introduces a high degree of complexity that most would rather do without, but there
are ways of formulating and engaging in meaningful relationships that can create long lasting
value for the company.

One way of engaging is to invite stakeholders to participate in the development of the business in
key areas of mutual interest. Starbucks’ relationship with Conservation International to promote
sustainable coffee production and fair-trade practices (Austin & Reavis, 2004) is one such
example. For the NGO it gives needed exposure to the organizations key mission and for the
company, in this case Starbucks, it gives positive exposure and a confirmation on the image as
being committed to sustainability. In addition, it can create large saving for the company. E.g.
the normal employee turnover rate is around 200% in retail while at Starbucks is it only 65%-
70%. In monetary terms it costs the company 500$ to train a new recruit (Austin & Reavis,
2004:3), so huge savings can be made. While there is no direct link between the corporate
sustainability and fair-trade practices and its ability to create a nourishing working environment,

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the active CSR strategy by Starbucks does differentiate the company from others and make it
more attractive also to its employees.

Limits to Transparency

If only the world could be more transparent it would be a much better place to live in.
Companies would behave more responsible, Governments would be able to enforce rules,
regulate much more effectively and people in general would have a much better idea about the
powers influencing their everyday lives.

Transparency has been the mantra of the CSR movement we have hailed the word on numerous
occasions on every seminar I have ever attended. When companies have come to us we have told
them that If only they were a little more transparent they would not be in the mess that they are
in right now! Or we have preached to them that the only way to protect themselves is if they can
report on a few more indicators in order to quantify their processes and show that they are truly
sustainable.

I have worked with these systems for the past 15 years and I know every one of them from A to
Z. I wake up at night reciting ISO26000 on Concepts, Terms and Definitions and I know the
weak points in the Global Compact and all the companies that cut corners to be part of the
sustainable business movement and being FB pals with Ban Ki-Moon.

On of my friends Michael Koploy send me an entry he made on 5 Questions to Start the

Sustainable Supply Chain Conversation and it made me thinking about some of the things that
we continue to talk about but keep missing. He does argue for more transparency, as we all do,
but also that we should take a look beyond the apparent and into the DNA of the company. The
“what are we all about”-question of sustainable business. How do we get managers to think for
themselves, their business and the society that they are part of at the same time?

We produce incentive plans and bonus schemes, but it did little or nothing to prevent greed and
poor ethics during the initial stages of the financial crisis. We created lists of “good” companies,
but they do not seem to do much better than the ones that are “bad”. We have systems upon

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systems that produce endless reports that only a handful of people actually read. So what is the
answer to creating a sustainable DNA for business leaders?

Well for starters we should take a good hard look at our educational system both the public and
private ones. What are we actually teaching our coming leaders about how to run a business? Are
we teaching them how to create a sustainable business model in more than financial terms or
have our business schools and universities become temples of past ideologies? I do not talk about
revolution or throwing professors out on the streets (even though some of them might need to go
that way), but about taking a hard look at what we actually teach our students. We know that
blindly following the thinking and guidelines of Keynes, Hayek or Friedman only works in the
short run (Keynes smiles) so why not take that insight seriously and bringing it into the lecture
hall.

Secondly we need to make shareholders/owners accountable. It will be a significant step away

from what we have been used to be doing until now and nothing like business as usual. For too
many years one could have an ownership form where one could own a company but not be
accountable for its actions. We appoint a board of directors, but we do not really care who they
are or what they are doing, as long as they keep producing the results that we want them to. In
the process they become complacent and distant from the decision making process. And when
things eventually go wrong they are often caught unaware of what have been going on right
under their noses.

It would be presumptuous of me to say that I have all the answers, but I do know that its takes
more than measuring to create a sustainable business as Michael points out. CSR is more a
symptom of a financial ideology that have been over interpreted and gone wrong than an
independent movement. Our never-ending quest for accountability and transparency will not
succeed until we realise that we need to make some changes to how business operate and we do
not do this by replacing with just another ideology.

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A Critique of Pure Reason – Business forgot how to listen

Kant said; “Enlightenment is man’s leaving his self-caused immaturity. Immaturity is the
incapacity to use one’s intelligence without the guidance of another. Such immaturity is self-
caused if it is not caused by lack of intelligence, but by lack of determination and courage to use
one’s intelligence without being guided by another. Sapere Aude! Have the courage to use your
own intelligence! is therefore the motto of the enlightenment…” (Critique of Pure Reason)

But it would seem that Business did not learn that listening meant one had to listen to somebody
else than the ones that represent the status quo.

What happened when it became common sense and a taken for granted thinking, that any
business venture claiming to be socially responsible had to have a direct link to the bottom-line?
As a keen follower of CSR and developments within business ethics it seems that the discourse
of Corporate Social Responsibility have steered of course and to some extend have fall down a
cliff.

CSR was about (I thought) making a difference to society not because it made good business
sense, but because it was the right thing to do. Now it seems to be the other way around. Even
though I to a large extend blame Porter and Kramer for their so-called “shared value” they only
tap into a discourse, which already existed in the mainstream business culture. That “there is one
and only one social responsibility of business – to use it resources and engage in activities
designed to increase its profits so long as it stays within the rules of the game, which is to say,
engages in open and free competition without deception or fraud “(Thanks, Friedman for making
it clear). That in order to be a legitimate in business one had first of all to think of the bottom-
line, that even though business might disclaim Freidman’s claim they continue to follow his
credo. CSR have become a business opportunity rather than change in they way that business
relate to the society and communities that they are a integrated part of.

It seems to me that companies that pursue profit in the name of CSR are trying to stand on both
sides of the river. Claiming that they have not left their liberal roots, while at the same time
trying desperately to convince their more critical stakeholders that they are continuing down the
path of rightness.

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However, at the core of CSR is the ability to see beyond narrow self-interest looking beyond
profit seeking and towards doing the right thing rather than doing things right. I do not claim that
any business will be any more successful, or that they will even have a better brand or see an
increase in dedicated employees. What my argument is that in order to really and I do mean
really, know ones business environment one have to be open, open in a way that puts aside
narrow interests of division leaders and executive managers and beyond one owns business
raison d’etre. Individual business leaders have to realise that their actions cannot only be guided
by the search of “the business case” they will have to use their intelligence to incorporate the
guidance of the people who is affected by their decisions.

Social media CSR myths – Crap in Crap out

It would seem that there should be a natural match between social media like Facebook, Twitter,
Digg, etc. and the voluntary engagement with stakeholders that is subscribed by most CSR
professionals and academics. However, there might be a natural match but between the two in
theory it seems that there is a long way to go when it comes to practice.

In my mind there are several things that goes wrong for social media practitioners when it comes
to CSR communication.

First, practitioners fall in two categories. One is what I call old school communication people
who looks at Social media as a channel that brings new possibilities to get the message through.
They properly have a good understanding of the ins and outs of the CSR practiced in the
organization but they are limited by a marketing mind-set. The second category relative young
people who understands the media and have been brought up with social media as a natural way
to stay in touch with friends and family. However, they might not understand the organizations
CSR in depth, its nuances and the challenges that come with having a much broader stakeholder
outlook.

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Second, social media driven by the users are a myth. Until this date I have not heard of a social
media effort from a private or public organizations have a significant proportion of its contents
provided by the organization itself. Think about it, even though you are a member of a really
great and interesting organization would you spend all your time there? Properly not. But
amazingly a lot of companies think that if they set up a social media platform and feed it with
commercial, lobbyism briefs and sneak previews of their products people will happily engage
and provide contents for their sites.

In reality most “successful” social media campaigns have been planned, driven and controlled by
the organizations that benefited from the exposure, and users have been invited to participate
only to support the already constructed message. There is no negotiation or co-construction of
contents. There is no possibility to let the better argument win or possibility to provide
alternative messages. The organization or a professional communication bureau controls
everything in the effort from A to Z and users are only puppets that can be played from a string.

When it comes to CSR communication this provides a real dilemma as transparency and
engagement is central to our understanding of a truly socially responsible company. So what
“normally” happens is that in order not to be perceived as manipulative organizations leave it the
users to provide information and debate, which in the end make the whole social media effort a
failure because people just don’t provide contents by themselves. Basically organizations are
planning to fail in their social media CSR communication.

Third myth is that Social media is cheap. Who is your social media resource? If you are lucky
you have half a person who is in charge of all the platforms available a daunting task of he or she
is to provide a large proportion of the contents for the sites. However, organizations think that
the majority of work is going to be done by the users and therefor do not provide any resources.
Just like having a newspaper and only employing the editor, so to speak. If you want to do
something serious about your online stakeholder engagement you need to allocate the resources
needed in order to make it work. I have heard many business people who complain that that their
social media activities are a failure, but when I ask what kind of resources has put into it, it is no

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surprise that they are not able to harvest the benefits. “Crap in Crap out” seem to be the
prevailing model as with everything else in life.

Getting to the context of CSR – Letting mentally handicapped

people contribute

I think that we are becoming to preoccupied with communicating about CSR, on the business
case and on showing the value of CSR on the balance sheet, when it is really about business
doing a difference in society. We think that when one lives in a welfare state like Denmark,
where the government will tender to all your needs there wouldn’t be any need for locally
context based CSR activities other than sponsoring the local football club. But the thing is that
there are plenty of opportunities for companies to make a real difference to people who really
appreciate the effort.

As one of the many activities I engage in is my work with the Danish association LEV. LEV is a
private national association for retarded people, relatives and others that were formed in 1952.
Basically covering handicapped people ranging from Asperger and ADHD to people with Downs
and other relative heavy diagnosis. People, who can function in society, but need varying degrees
of support and structure in order to do so.

One of the biggest issues that these handicapped people have is that they are being shoved away
in state sponsored initiatives and offers, where they are isolated from the rest of society. One
could call it that the “blanket of the welfare state” has covered them protecting people from
harm, but making them unable to move. This is of cause done with the best of intentions
shielding the weak in society from all the bad things that could happen (and maybe also shielding
society from them). But an unfortunate side effect is that these people become isolated, their
personal development stagnates and they feel that they are not offered the opportunity to
contribute to society like everybody else.

However, I’m sure that there is room for one or two people in every workplace that is not exactly
fitting into our perception of normality. I am also sure that many institutions have tasks that are
waiting for employees, who will take pride in doing the tasks that we normally never get done,
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because they are routine and mundane. It may well be that an employee who is disabled does not
have the same skills and resources as the rest of us, but they have something to contribute that
we all can benefit from.

Some companies have already discovered that working in close corporation with local NGO like
LEV on specific areas can actually make CSR very real to employees and customers alike. Even
though they have not framed the initiatives as CSR in their own communication their activities
are testimonials to some of the values that guide them.

To many companies CSR have become something that is detached from the day-to-day
operations. Initiatives that are within communicated as CSR are more or less reduced to CO2
emissions, Codes of Conducts, Signing charters and different forms of philanthropy. But it does
not have to be like that. CSR can actually be much more concrete, down to earth and close to the
employees. By inviting a handicapped person into the organization one gets a real idea about the
values and ethical outlook of the company one is part of. The handicapped that are willing and
able are more than happy to be invited into companies, where they can earn their own money and
contribute on an equal basis with other employees.

I’m not saying that it is easy and it does require that the people who are involved also knows
what they are going into, but the organizational benefits are huge. Not only to the individual
handicapped person, but also to the employees that work with them and to the company as a
whole.

It is the secondary effect that is central

When working with CSR we like to believe that there is a cause effect relationship between the
activities that we engage in and the results we can measure. But we often overlook that it is the
secondary results that represent our greatest achievements.

Most organizations look at the direct effects of communication technology like CSR systems and
efforts to introduce sustainable technologies with a communication component. There is no
doubt that there persist other perspectives on how organizations can achieve sustainable business

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development but in all cases is the communication part central. To illustrate one can look at CSR
as part of the branding strategy of companies that in order to boost their image advocate their
products as green or sustainable. This I will characterise as a 1st order communication strategy
like a cause-effect system of meaning.

We can look at communication technology like CSR as “what management wants”. This can be
decentralisation into global teams, working from home systems or technologies that enable
projects to work cross boarders. The common denominator for these communication
technologies is that they enable people to process more data more efficiently or/and with greater
ease. However it is often the side effects or secondary effects of the introduction of a CSR
systems approach that have the greatest impact on business development, an effect that is often
ignored or underestimated in the original prospect. So what management wants is often not what
management really gets because the secondary effects outweigh the first order ones.

So what does management need to look out for when implementing a new technology, like CSR.
First of all one should not underestimate the effect of cultural changes. Organizations cant
implement a new technology without assuming that people will do their tasks differently
meaning that they will use or at least relate to the introduction of this new process that is
presented. They do not have to embrace CSR but the presence of systems that coerce employees
to relate to something than them selves will force a cultural change no mater what. One could say
that CSR questions the status quo forcing employees to ask themselves; “who are we as and
organization and how do we interact with people outside”.

Another effect closely related to cultural change is the raise of new types of conflicts. When
people question their own ethics they will natural also question the ethics of their fellow
employees. This give raise to conflicts that relate to our understanding of the consequences of
how we interact and do business with customers or other stakeholders. Are we really doing
good? Or are we only doing well? Just look at the banking sector that for a long time did not ask
these fundamental questions, but almost exclusively used CSR as a means create a image of
“goodness”. But when the ethics were questioned an internal conflict erupted questioning the
very fabric of what the business was all about which was mainly grounded in CSR or Ethical
framework of understanding.

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Lesson is that when starting on the path of CSR it is not only that directly related effects of the
system that one needs to take into account of, but also the changes that comes with thinking
differently about the organization. If you ask the organizational members to think (and I mean
really think) about the consequences of their actions one should take this into account when
embracing a technology. CSR asks employees to think and react to consequences of the actions.
So be prepared to embrace rather their input rather than only thinking of CSR as a way create a
better image of the organization to outside stakeholders.

Carving up the elephant

CSR is never going to last. It is a management fling, which will go away in a few years. It is
what we have always done noes we just call it something fancy…

For most laypersons the concept of CSR is like a very big elephant that is impossible to
understand the size and reach of. There seem to be no end to what is included into the realm of
CSR as long as it has to do with stakeholders, ethics, the environment or any of the other labels,
which are included. And if one does not understand something it is easier to dismiss it all
together than try to understand what the concept brings to the table of progressive business
development.

In my thinking it is about your ability to take this ever expanding and complex concept into
something that can be managed and developed in an organizational setting. The Global
Compact, OECD guidelines for multinationals or the private ISO26000 are all attempts to carve
up the elephant up into manageable pieces. Not that any of these approaches are flawless, but
they do represent systems that business can use to manage their CSR activities and create a
meaningful framework.

The important thing to think about when creating a CSR framework for business is that it has to
be directly related to what the business do. So if one is in transport your effort have to be about
how CSR helps you business be even better at what it does. Too many times I have seen CSR
reporting and initiatives which are detached or represents a remote connection to strategies and
mission.

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My advise to business would be that rather than doing a half-hearted effort, it would be better to
focus on areas outside CSR which brings more value such as systems for governance, quality or
excellence in process management. When the business matures and internal systems can support
the effort, there is a much better chance of success with systems like CSR that goes beyond the
close stakeholders.

People can be ethical organizations can’t

From time to time the discussion of ethics arises in the CSR debate. We would like to think that
CSR is a way for organizations to conform to the norms of society and what is expected from
companies in terms of behaviour. But can you really directly link ethics with CSR ?

First of all, I would like to make my position clear on what I think of ethics and its relation to
organizational behaviour. People can be ethical in the way that they can distinguish between
what is good and what is bad or at least most people can do so. That can make a fairly good
decision on the consequences of their actions in most cultures around the world even though they
have never been there before. There will of cause be differences from region to region based on
cultural norms, religion, politics etc. but it would be fair to say that all cultures would not accept
murder, theft, or other forms of harmful behaviour towards people.

Secondly, organizations are made up of people but this does not mean that the sum of their ethics
can describe the decision making process that it goes through. Rather an organization lets say a
company, will develop it own rational for make decisions. In this case it can be profits as the
raison d’etre is to make a profit for its owners, it is what one could call a fundamental condition
of being a firm. So even though people might bring ethics in to their workplace it will be
overruled by the condition that they have to make a profit.

This it where it becomes interesting because what CSR is trying to do is to make the organization
receptive to other conditions or the ethics of other stakeholders. Remember that stakeholders can

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be other organizations as well as individuals that have a stake in the actions of the firm. These
stakeholders might have other raison d’etre than the firm such as reduction pollution or creating
better work conditions. They might not regard profit as a very noble goal at all or they might
even think that the whole concept of profit before people is an unethical condition. But with CSR
the two create a platform from which that can communicate in a meaning full way. As one can
not talk to an organization like wit people so what is needed is the creation of a language that
both parties can think of as meaningful and as a way that it can express its ethics through. In
terms of CSR this language have become expressed through the use of systems.

CSR systems are in my mind the codification of ethics that enable organizations and stakeholders
to communicate with each other in a meaningful way. With my almost 15 years around different
management systems I have come to believe that the only way an organization is effectively able
to communicate with it self or with its surroundings is though the use of systems. Mind you I
have used the word effectively as individual are able to communicate outside the management
system but it will always less effective in relation to reaching organizational goals. Codification
means that the organization negotiate and in some cases just accept the norms which a
stakeholder present. F.eks. is the ten principle in the Global Compact a codification which a large
proportion of firms are willing to accept and subscribe to. Or a firm can subscribe to the code in
SA8000 that communicate to stakeholders that this organization is upholding the Human Rights,
Rights of Children and ILO declarations and conventions. This does not mean that individuals
can make mistakes and break the rules or that decisions can be made which are poor or bad, but
like “people” this is what is to be expected.

So back to the question if you can directly link ethics to CSR. If one accept the sentence that;
“people can be ethical but organizations can’t”. Then one needs to invent some form of bridge
between the two that gives meaning, but at the same time accept the conditions that each must
function under. For people this means the ability to distinguish between good and bad, and for
organizations their raison d’etre eg. Profit (firm), knowledge (education), helping the poor
(NGO?), survival (the poor), etc. Bringing these two together is done through the use of systems
that enable toe codes from one stakeholder to be understood and acted upon by the other. This
bridge or translation systems is continuously negotiated between the parties involved based on
their individual understanding of what is good. So can you directly link ethics and CSR? Well

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yes if you accept that CSR is a coding system for effective communication between stakeholders
that would otherwise not understand each other.

Boundaries of CSR

Sustainability seems to be an all-encompassing concept with no limits to its practical usage.

Numerous times we have discussed the problems related to issue that we do not really have a
good workable definition of CSR. But in my mind we should at least have some kind of
framework that will enable us to differentiate between what is and what is not CSR.

I have compiled a few pointers as to areas that could help to guide professionals in their work
and to some extend myself as well.

CSR -> HR

Not all the activities of the HR department is related to CSR even though they do deal on a daily
basis with some of the most important organizational stakeholders such as employees, unions,
management, etc. However, just because one department has contact with key stakeholders it
does not mean that they practice CSR. One border that can be used to make the distinction could
be the concept of law (or rules) and voluntarism. The rules that the HR department works under
are normally well defined, either through the law, negotiations with the unions or internal
procedures that shapes the day-to-day work. In this context CSR would be activities, which are
outside the law that the department (and thereby the organization as a whole) take upon
themselves on a voluntary basis. This could be the creation of stakeholder networks outside the
organization itself, development and education of employees that enables them to be qualified
for jobs that are not directly linked to the activities of the organization or invite stakeholder
groups which are affected by the activities of employees, unions and management that are under
normal circumstances not invited to engage. So while the boundary is hard to define it is clear
that not everything that the HR department does can be viewed as CSR some things are just
processes, organizational development and tactical decision making.

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CSR -> Marketing

For many who do not know much about CSR is the marketing aspect always being put forward
as the most prominent reason why companies engage in the activity. However, for most
companies the marketing approach is far from what is core to CSR activities. If one look at the
costs of social audits, greening the supply chain, effective risk management systems, training and
education alone, you can be sure that any marketing professional would tell you that from budget
perspective ends does simply not meet. So thinking of CSR as good advertising would simply be
too narrow a view. There are elements within CSR that marketing can use such as environmental
branding or fair-trade labelling, but the concept of CSR is much more complex than just a way to
sell more products. When one defines the border between the two one could look upon CSR as a
concept that marketing can use elements of, but which does not constitute the whole of the
organizational effort to be sustainable. A good illustration would be that if the organization only
thought of CSR as a way to promote products it would only cater limited number of stakeholders
and they would soon realise that there are many more powerful and influential groups out there.

For some organization it could prove valuable to use an IMC or Integrated Marketing
Communication perspective on their CSR activities, in order to create consistency across the may
channels that the organization communicate through. A concept I have written about before.

CSR -> PR

CSR communication can both be convincing and at the same time create mistrust. If an
organization tells the truth and tries to do better in good times it can find that stakeholders will be
more loyal and understanding in times of trouble. Some call this the Teflon or Halo effect of
crisis communication. That it would seem the some organization can get out of all kinds of
trouble that others would find close to “life threatening”.

Public Relations s normally set within the communication department or as a division of

marketing, dealing mainly with one prominent stakeholder namely the Press. Dealing with the
media is like a double-edged sword. If you are able to get their attention during the good times
you can be sure that they will be there when things go down hill. Some managers think that they

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can “manage” the press in the sense that they can decide what journalists write. However,
nothing could be further away from the truth. Actually the more an organization tries to manage
the press the more they will feel a counter pressure. As organizations have learned to spin or
frame stories in a certain light so has journalists learned not to use only one source on their
stories. That is not to say that all journalists will investigate all the claims that an organization
makes about itself, but sometimes they do and if they find that they have been lied to it will be
very difficult to gain the trust back. Just think of Nike and Sweatshops, Wall-mart and labour
rights in the US, Apple and human rights in China or Shell and oilrig dumping in the North Sea.
While all these stories are old, some even over 20 years, they still stick to the brand like tare and
are testimonials to bad PR and poor CSR.

CSR -> Finance

Something new to the world of CSR is that the concept gains more and more acceptance within
the finance department. Traditional have finance found that the concept of CSR was something
for others to deal with looking at the concept as soft or were eve hostile towards it in a
Friedmanian way. One could say that the boundary between the two was at the door of the
department. But as the CSR have matured and to some extend finance departments as well, we
now see the two worlds converge. To just name a few areas one could come up with Responsible
Investments that increasingly have become a source of financing for companies that wants to be
perceived as sustainable. Lists like the FTSE4GOOD or DowJones sustainability index have
made some modern companies realise that there can be real financial benefits of working
strategically with the concept of sustainability. The whole area of Risk management has been
expanded with the introduction of CSR. Until recently risk management was limited to IT
systems, good corporate governance and whistle-blowers, but with the introduction of CSR new
elements have been added that have the potential of reducing new areas of risk. More and more
companies are introducing social auditing together with the due diligence systems when making
investments because they realize that social risk can make or break the long-term profitability of
an investment. Companies include stakeholder engagement in their efforts to listen and
understand less salient voices such as NGO and other organizations that have a stake but no
direct dealings with the organization. Other area of contact can be within financial reporting.

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Investors not only like to know about profits and margins, etc but also what the company is up to
in relation to the environment, labour and human rights, and what it does in relation to corruption
all in order to understand the risks that they can expect on their investments.

So at the moment the boundary between finance and CSR is blurred as finance and CSR people
are trying to find out where we should draw the line or where we could get the most good out of
the relationship.

Closing remark

These are just some of the boundaries of CSR has with organizations and corporations
especially. I’m sure as the concept evolves it will expand even further into everyday operations
and how corporations conduct their business. I’m also sure that some of these expansions will be
fruitful while others will be dead ends and bring nothing new to the organizations ability to
operate other than more complexity. I also believe as we get out of the financial crisis we will
experience that companies will try to see how they can use a CSR approach to do improve their
business and ability to crate a sustainable business.

CSR and Development Corporation meets

Can development and CSR really meet or are they at odds no matter what you do? I have met
many people from the development world who are really aggressive towards CSR and just about
everything it stands for. And while I will be the first to admit that CSR is far from a perfect
approach for business towards its social responsibilities it is just about the best guess out there on
how its done.

So why all this hostility and aggressiveness towards business having a social responsibility, is it
not what we all want that business take on more of the social burden that governments cant
handle by their own?

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Here are some common denominators on what people in development think is wrong with CSR.

 It is a branding and communication exercise that has nothing to do with social

responsibility.

Well it is true that a lot of companies are actively communicating their CSR activities and that
for some of the major companies CSR has become part of the image that we have of the
company. For one I think the Abraham Lincoln (attributed) quote “You can fool all the people
some of the time and some of the people all the time but you cannot fool all the people all the
time” rings true. All communication people know that you can’t lie forever and the same goes
for corporate communication. If there were no hint of truth to in the brand it would at some point
be exposed as a fake.

 It is only exercised to reduce the risk of bad PR.

There is a strong risk element in CSR because it is the only business approach that has some
success in confronting social risk. Actually risk management have been one of the primary
“business cases” for CSR. But risk is not limited to PR alone it can be many different things that
has nothing to do with creating a good or bad image of the organization. Proper risk management
take a holistic approach to the organization and so does CSR. With this approach on gets an
insight into operations of the state, which under normal circumstances would be left out or
marginalised.

 It is seen as a neoliberal project that is out to exploit the developing world

There seem to be the perception that business somehow has feelings that guide them to do evil.
But as far as I know there is no evidence that companies in themselves are either good or evil,
they are as far as I know just companies working in a market. But with the market there are
structures and mechanisms that can be harmful. The companies might or might not be aware that
their actions have a counterproductive result or even harm people who are in contact with its

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operations. CSR is an effort to confront some of theses impacts in a constructive and systematic
way rather than tackling them one by one as they arise.

 It will be gone in three years.

The same thing was said three years ago and CSR is still around. In the years I have been
involved in CSR there have been shifts in focus from reporting, to communication to
governance. At some point either one have been the prevailing issues that have been talked
about. I’m convinced that CSR will be around for many years to come because it works from the
basic principle that organizations have a responsibility towards its stakeholders. These basic
premises have been true always and that we call it CSR is more a construction of the time we
live in rather than a shift in basic assumptions about business and society.

I hope and think that CSR professionals and development people can meet on common ground
and that the two have something to learn from each other. But there is a strong need to confront
some of the stereotypical assumptions about how business operates and how development people
think.

From leader to follower – the impact of Danish CSR legislation

One would epact that countries that have a dedicated CSR law would also be the ones that would
lead the pack on reporting. However according to the latest KPMG International survey of
Corporate Responsibility Reporting is Denmark at best a slow follower behind countries like
India, Spain, Hungary, China and South Korea just to name a few.

Traditionally the Danes have thought of themselves as the “inventors” quality reporting on CSR
with companies like NovoNordisk, Novozymes and Danisco at the very top. But it would seem
that successes have fostered complacency and now just about everybody has overtaken this one’s
a beacon of CSR reporting. According to KPMG we have moved from Quality to Quantity as we

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see more and more reporting being done but the quality of these reports does not seem to follow.
One might think that having a dedicated CSR law would foster quality but it would seem that it
is the other way around.

It should not be that difficult to follow the law as it is quite easy to come up with a policy, create
a report and act on its findings. But it looks like that most companies have focused on the letter
of the law rather than internalizing CSR as part of the business. This leads to the dilemma if CSR
should be voluntary or involuntary as s the case in Denmark at least for the 1100 biggest
companies.

If the KPMG survey is true it could mean that a voluntary approach foster quality in reporting
such as in the areas of IT, Assurance, Integration, use of standards and use of communication
channels. While a law approach would mean that one gets more CSR reporting but at a lower
quality.

One could argue that quality will come as time passes and it is only a matter of getting the right
tools implemented. But if one looks at the CSR reporting discourse that Danish companies have
taken it would seem that companies goes for the lowest common denominator.

In my mind Danish companies have taken a clear and present competitive advantage and turned
it into a exercise in cost reduction. Shame on you….

Research and education gets a central position within EU

CSR policy

While I do have some criticism of the new EU CSR policy there are some points were I think
progress have been made. And within the field of education and research there are clear signs
that lessons have been learned.

“The further development of CSR requires new skills as well as changes in values and behavior.
Member States can play an important role by encouraging education establishments to integrate
CSR, sustainable development and responsible citizenship into relevant education curricula,

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including at secondary school and university level. European business schools are encouraged to
sign the UN Principles for Responsible Management Education.”

I think this quote from the policy shows that CSR have hit the mainstream vein and that it should
be taken serious not only by business but also by the institutions that teach our future leaders that
there is such thing as ethics and morals.

Especially London School of Economics has been accused of having a lax relationship in terms
of teaching their students what is right and what is wrong. Actually to such extend that business
schools had to apologize for alleged harm that students had done in the wake of the first financial
crisis. So this step is definitely a step in the right direction in terms of trying to integrate moral
thinking into the curriculum.

Another subject is that EU will support research and the further development of the field of
research.

“High quality academic research supports the development of business practice and public policy
in the field of CSR. Further research should build on the results of projects financed under the
6th and 7th EU Framework Programmes. The Commission will explore opportunities for
financing further research and innovation on CSR, and supporting CSR principles and guidelines
in research funded still under the 7th Framework Programme, as well as under its successor,
Horizon 2020, and in building the European Research Area.”

While there are no independent money to be found it is a strong signal to send that they will
continue the funding beyond the 7th framework, which will end in 2011. So all in all not all is
bad with the EU CSR policy there are beacons of light out there. At least as long as they don’t
give the money to prove the concept of Shared value I will be a happy camper.

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Where there is smoke there must be fire – EU CSR policy

measurement for success

In my short series n the new EU CSR regulation I have come to the subject of EU CSR
performance. Within the document there are lists of success stories highlighting what have been
achieved since the last revision in 2006. The focus is on the normative institutions, which have
been established and that companies have started to adhered to (on a voluntary basis of cause).

According to the CSR policy there have been significant progresses in the commitment to
sustainability issues from companies in the EU.

“The number of EU enterprises that have signed up to the ten CSR principles of the United
Nations Global Compact has risen from 600 in 2006 to over 1900 in 2011.”

While it is nice that the number of companies and organizations who are participating the UN
global compact is rising it is hardly to be a considered a success factor in itself. Of cause it
depends on your perspective and what you believe that CSR should be about but basically the
commitment to UN Global compact is not a set of actions it is rather a communication about a
future action that you might or might not take.

Last year around 2000 organizations were thrown out of the GC because they were unable to
produce a communication on progress (COP) whish is the document that you commit yourself to
produce when signing up. It is a common mistake that one screen for signing up for the GC
rather than to look for the COP, which at least give some basic verifiable data to look at.

The EU regards the “promise to commit” tangible proof that companies are committing
themselves to the CSR cause on a bigger scale. And to the true believer this might be enough
proof that CSR is really working, that organizations and companies are participating whole
heartily in the movement. While this would be nice there are also some who suggest that
companies participate not for the good of the world but because it reduces the risks it is subjected
to and that CSR is a novel way to market your brand and your products.

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So when the EU promotes the signing of different normative standards as a success indicator for
CSR it is only one side of the truth. It would seem that the EU uses the criteria “where there is
smoke there is fire” as a measurement for success.

Shared value in the EU

The EU has announced a new policy and some might think improved version of their CSR
recommendations. The 13-page document includes a series of changes in both approach and
basic assumptions on what role CSR should have. This will be the first article in a small series on
the EU CSR policy the changes adopted and its possible impact.

The First change that comes to mind is the change in definition of CSR from “Corporate Social
Responsibility is a concept whereby companies integrate social and environmental concerns in
their business operations and in their interaction with their stakeholders on a voluntary basis.”
(European Commission, 2010) into a much shorter version were CSR as “the responsibility of
enterprises for their impact on society”(European Commission, 2011), which is shorter but
incompact much more.

A few examples on how the new definition changes the perspective on CSR. The organizations
that need to engage in CSR activities are broaden from the old “companies” to a much broader
framework which encompasses “enterprises”. This broad definition is much more in line with the
ISO 26000 idea that all organizations have a commitment to society. While the EU does not take
the full step and included the whole definition of the ISO is a clear step in that direction. Second
CSR is now both activities, which are defined by the law and those that the organizations engage
in on a voluntary basis. Which indicate that adhering to the law could be sufficient to live up to
the minimum standard of social engagement.

Third, the EU have taken a clear stand on what CSR should be for and as they formulate that
organizations “To fully meet their corporate social responsibility, enterprises should have in
place a process to integrate social, environmental, ethical, human rights and consumer concerns
into their business operations and core strategy in close collaboration with their stakeholders,
with the aim of:

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Maximizing the creation of shared value for their owners/shareholders and their other
stakeholders and society at large Identifying, preventing and mitigating their possible adverse
impacts.”

While the concept of shared value as cornered by Porter and Kramer earlier in the year have
found it way into numerous CSR policies it is also a controversial concept. As it is fails to
address the moral and ethical concerns that stakeholders might have with the company outside
the monetary realm and is seen as an attempt to make CSR a question of profit rather than if the
actions of the organization is positive or negative. Furthermore it puts the moral responsibility on
the stakeholders rather than on the organization and its management. As a reactive concept it is
up to the stakeholders to make management aware of issues and not for management them selves
to be proactive in ensuring that basic rights and environmental concerns are addressed.

Social capital and its use within CSR – Moving away from the target

Ever since Pierre Bourdieu cornered the term social capital it has been used and misused to a
degree that even the inventor would have a hard time recognising the concept. In order to
understand what capital in a Bordiuedian contact one needs to understand that it is centred on
class and how people position themselves within society and organizations. He identifies three
different sources that capital can come from Economics (e.g. money or what we would call
monetary resources), Culture (e.g. art, beauty, etc.) and Social capital. In his understating social
capital is centred around an emphasis on conflicts and the power function like the social relations
that increase the ability of a subject or actor to advance their interests. Social positions and the
division of economic, cultural and social resources (which is legitimized with the help of
Symbolic capital which is the combination of capital that is most valuable in the specific field) in
general is determined by the capital resources which a person is able to gather within the field
were he or she wants to be active. The field is understood as a network or a configuration of
objective relations between position that gain their position depending on the capital that is valid
in the field. Or “’the aggregate of the actual or potential resources which are linked to possession
of a durable network of more or less institutionalized relationships of mutual acquaintance or
recognition’ (Bourdieu, P. 1986. ‘The Forms of Capital.’ Pp. 241-58 in Handbook of theory and

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research for the sociology of education, edited by John G Richardson. New York: Greenwood
Press.).

This means (at least in my mind) that one could never look at social capital in isolation from
other forms of capital, but it should rather be seen in combination with other forms in order to
understand how power was distributed within a given field. So much for theory…

Within the CSR movement there have been a tendency to see social capital as a way to measure
and justify sustainability issues (e.g. capital in isolation). This is mainly because it is seen as a
relative easy concept to comprehend and within the definition there seem to be real quantitative
measurements to be made. For example one would ask; how many personal connection does a
person have?, How much do they socialize?, Where do they put their trust? What is their impact
on the local community? etc. All of these examples of things that one can go out in the field and
investigate and come back with measurement. In theory (at least in this one) it would be possible
to find out whom in a given field have the most social capital and thereby identifying who and
about what a socially responsible company should communicate around what issues. Or at least
this is the idea.

However, this will in my mind be a step in the wrong direction as it dilute both the concept of
social capital as it was intended by Bourdieu and will make Corporate Social Responsibility
impact a matter of how much or little capital impact one is able to produce. I have come up with
five arguments why the two should not be mixed.

First it presents a theoretical challenge. As I have blogged about before is CSR not a concept
with one specific definition it is more or less up to the use or organization to define what it
means to them and then take it from there. So if on uses the concept of CSR and proclaims that
the operationalized form of is to be called Social Capital which is also an ambiguous concept the
whole thing seems to be diluted into something that nobody understands or agree upon. This
would not only leave the organizations that adopt the concept not much better of than when they
started but might even lead to more bewilderment.

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Second is that fields or networks are under constant change especially within the world of NGOs,
CSOs, municipalities and governments were companies need to operate with their CSR efforts.
CSR is very much a political battleground and requires constant negotiations with stakeholders
on what is important and what is not. The capital that is valuable in one instance might have
much to say in another and as companies need to operate efficiently in many social contexts it
would not make sense to just to stick to one understanding of what social capital is. Just think of
BP and how there was a sudden but decisive shift in public opinion despite the fact that they
were ( or at least they themselves) considered the “green Oil Company”.

Which leads to the third subject that field analysis is retrospective it will not give you a
indication about what will be important next, what is the future issue we need to be aware of. In
this sense it is more analysis that will lead to the status quo rather than give organizations an idea
what will come next. What is the challenge that management need to deal with in the future what
will come that will force this field to change it understating of what capital is valuable.

My fourth objection to the use of social capital comes from the idea that every human action and
understanding should somehow be capitalised. Why is it that in order to understand something
we will need to measure it in terms of money? In my mind moral and ethics in the centre of CSR
that is about doing good and doing well at the same time. If one is only willing or able to talk
about something if we can measure it in terms of value there is something fundamentally wrong
with us. CSR can be a effective approach to handle social complexity so why not use it as such
instead of reverting back to an economic mindset that will just make it an useless activity.

Fifth is what Ben Fine call the issue of BBI or “Bringing Back In”. It seems like that as the
concept of Social capital is so undefined and it would that each time the so-called “real”
economists does not understand something it must be Social capital. This means that the whole
concept have become some form of Freudian garbage bin where we put stuff because it has
something to do with the unconscious or the things we can’t measure and therefore not

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understand. This has meant that we have seen race, gender, crime, security, rules and norms
being included into our understanding of Social capital. And even as time have progressed and it
has become even less transparent we have started to bring Bourdieu back in as we have
wondered so far of the centre that it doe not resemble the original idea.

Does this means that Social capital cant be used for analysis? No it does not. It can be very
valuable as a strategic tool and understanding of environments and social contexts which
otherwise would be too abstract or complex to comprehend.But it should be done so as it was
originally intended not as a concept which have morphed into something which have stretched it
much too far. In social science it tell us something about the dynamic of the field we are trying to
understand. But as one can see from the list of definitions below there is more than one that
wants to stretch the concept further than it can take. CSR is a concept by which organization
takes a critical look upon itself and its actions and evaluate if the consequences of these are to the
benefit or harm of its stakeholders. It does so using normative standards that are issued by
institutions like the EU, OECD, UN or local governments.

CSR is a reactive concept that gives organization an idea what is expected of them now and what
they might expect of them in the future. The use of social capital will only lead to a degeneration
of both concepts and take out the benefits that a open understanding of the role of business in
society, which CSR brings with it into a realm where it no longer will be effective.

I can just hear the executive manager talk about how much impact their company have on social
capital and proclaim, “that while our internal stakeholders are still underpay and discriminated
against they are at least rich on social capital”.

Storytelling at the core of corporate CSR branding

The story corporate story should be at the core of any CSR effort. It is what I would call the
cement that holds everything together inside the organization and makes it possible to
communicate with a degree of persuasion with its audience.

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If one looks at storytelling as elements of branding one can distinguish three elements Culture,
Identity and Image.

Culture being the stories that employees tell each other from the old t the new guy or among the
old-timers or is the ones told in the employee magazine as examples of good cultural behaviour.
It is also the informal stories that circulate among employees or close associates about how we
saved the day by some act of heroism or how we beat the people from accounting at the annual
summer go-card trip.  All these stories being told everyday at all levels of the organizations is
building, reshaping and reinforcing corporate culture.

The Identity is what employees belie to be unique to being in just this organization. One can call
the corporate identity the reflection of the stories that is being told. One could say that they are
the collective way of interpreting the stories we call our own which outsiders might not
understand the fine details of. One cannot totally distinguish culture and identity from each other,
as they are interlinked and always evolving. However, one can project or at least try to project
ones identity on the surroundings as explicit examples of corporate culture.

This leads to Image, which are the pictures outsiders get of the organization when it hears the
corporate story being told. Stakeholders listen to the stories being told but are also taking part in
its reproduction creating a mirror of the corporate image that the organizations identity can use
as tool for affirming or renegotiating its culture and its feeling of being one.

In order to analyse and understand corporate storytelling one can use the actantial model
developed by Greimas, which basically breaks down the story into six different but essential
components.

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The axis of desire, which refers to the subject or hero (who can be both good or bad) and the
object, which is the thing he/she/it, desires. The axis of power that can be broken down into a
helper or the person or thing that helps our hero and the opponent that is the person/thing trying
to stop our hero from achieving his goal. The helper assists in achieving the desired junction
between the subject and object; the opponent hinders the same.

Finally we have the axis of knowledge that is composed of the sender and the receiver. The
sender is the person or thing that is requesting the establishment of the junction between our hero
and the object he desires. The receiver is the element for which the quest is being undertaken.

Using this framework of understanding one could for example look at the most prominent CSR
stories of 2010 the BP oil spill or the Google battle for free speech.

BP‘s oil spill in the Gulf of Mexico

Deepwater Horizon was one of the world’s largest ever oil spills, and understandably this story
absolutely dominated 2010. Not only did it put a final nail in the coffin for BP’s once vaunted
sustainability reputation, but it heralded a major rethink about the viability of deep sea drilling.
BP didn’t cover itself in glory by failing to come up with a realistic remedy until far too late –
and ended up picking up most of the tab, thereby putting paid to the usual assumption that
pollution is simply an ‘externality’ of business.

Here the CSR policy of BP could be seen as a helper in telling the story that the company was
trying to communicate. However, the hero or BP executive management was not able to use the

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help they were getting and ultimately failed to keep the BP CSR brand intact. That the power to
decide if BP was allowed to win or fail in the efforts was given to the local fishermen by a
combination the statements in the CSR policy and the medias efforts to find a compelling case to
write about.

Google’s battle for free speech

Google’s withdrawal from China at the beginning of the year was a landmark decision in the
battle for free speech on the web. A real clash of titans, no other story this year illustrated better
the clash between government and big business around human rights issues.

In the Google example we have a case were the CSR policy was used successful even though the
case did not come out as a commercial success for the company. When the company was
challenged on its policy it stood by its values and identity and ultimately was able to prevail as a
ethical brand taking a decision to withdraw from china rather than compromise its ethical
standpoint. The winner becomes the Google identity and brand which is viewed its stakeholders
as a company who puts people before profit.

These stories and many more show that CSR is an essential part of the corporate brand and that it
is central in the story that we tell. Also that the policy is not something that corporate executive
should take lightly but that it is actually a document which quite literally can help or break a
company brand.

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Has the CSR movement really won the battle or have they lost
the war?

In the article from the Economist from 2005 Clive Cook argued that the CSR movement have
won the battle for ideas about the virtues company and not least the harts and minds of
executives around the world.

As Cook put it in 2005 “CSR commands the attention of executives everywhere—if their public
statements are to be believed—and especially that of the managers of multinational companies
headquartered in Europe or the United States. Today corporate social responsibility, if it is
nothing else, is the tribute that capitalism everywhere pays to virtue.”

And there is no doubt that CSR have made its way into almost every crack of the business
process from Human Resources and employee benefits to product development and production.
These seem to be no escape from CSR everywhere one goes there seem to be a big sign that
boasts about how corporations in some obscure way bring good to the world. Reports are being
issued, social media are bring utilized and campaigns are being run just to boast about how this
company is creating shared value or is leading the fight against green house gasses.

It would seem that the CSR movement have not only got the a good grip in the tail of the
business beast but that it is also able to make a good buck for itself along the way.

“The winners are the charities, non-government organizations and other elements of what is
called civil society that pushed for CSR in the first place. These well-intentioned groups
certainly did not invent the idea of good corporate citizenship, which goes back a long way. But
they dressed the notion in its new CSR garb and moved it much higher up the corporate agenda.”

But now six years down the road and one maybe two economic crisis’s down the road it the
effects have not been what Cook describes. Companies have not flogged around the charities, the
NGOs or CSOs in order to create a new type of development system in the face of government
cut downs. In fact there have been a tendency to streamline efforts into the main business process
to search for the ever-elusive business case.

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While the CSR movement had hoped that companies would come to them because they had to
power to publicly humiliate them through exposure in the press and other media this has not
happened. Instead business have initialised CSR as part of the conditions of doing business like it
has done with marketing, lobbying, employee benefits, supply chain management, etc. One could
say that in public-relations terms, their victory is total but the war on ideas was not really won by
the CSR moment in the end. CSR did not change the face of corporations in any significant way.
So when Cook argues that “…their opponents never turned up. Unopposed, the CSR movement
has distilled a widespread suspicion of capitalism into a set of demands for action.” It is a truth
with modifications it would be more accurate to say that corporations reorganized.

One can just take a quick look at some of the so-called “green” companies that have been hailed
by the CSR

moment as frontrunners. Companies like BP that even adopted a green logo but ended up with a
huge crisis on their hands in the Gulf of Mexico. Novo Nordisk that have been instrumental in
the CSR reporting scene and the fight against diabetes that seem to go from one bribery scandal
to the next on a almost continues basis or Bank of America who were in the centre of the
financial crisis creating bank products that they themselves had a hard time understanding and in
the end lead to the fall of several major financial institutions around the world.

And maybe it was because that they did not really believed in the idea of corporate social
responsibility that they were lead astray. That “they were starting to suspect that they have been
conned. Civil-society advocates of CSR increasingly accuse firms of merely paying lip-service to
the idea of good corporate citizenship.” So corporate executives started to think how to make the
best of it, how can I “conn” everybody back, so that was what the executives did. They might
have called it something different but in reality they started to dress their unsustainable products
in a think “green” coating just think of the three companies I just mentioned and the companies
they have been running while at the same time doing some of the most unethical acts in
corporate history.

We should not blame the companies for being what they have always been. All companies are in
some way or another born out of the basic idea of greed that the owner somewhere along they
way would make a buck or two from what thecompany was doing. So companies continue to be

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build around the idea that the main interest should be to make some kind of profit from its
activities. “When commercial interests and broader social welfare collide, profit comes first.”
And we seemed to forget that when everything went fine and that there would be a price to pay
when markets started to go downhill.

As Cook so rightful said but might not have fully realised the corporations have not changed
their DNA they are still the same beast that they have always been. What we need to learn is that
the state, society, the environment and business need to co-exist like everything else in the world
but that we will never live in perfect harmony with each other but constantly need to keep each
other accountable for our actions no matter what role we play. So when Cook says “Capitalism
does not need the fundamental reform that many CSR advocates wish for. If CSR really were
altering the bones behind the face of capitalism—sawing its jaws, removing its teeth and
reducing its bite—that would be bad: not just for the owners of capital, who collect the
company’s profits, but also for society at large.” I think that this is even more true now that it
was when the word were spoken in 2005 when we really did not fear the big fundamental
changes that we soon after experienced.

Private business on a leash

Business needs frames and structures that they can relate to not given control over and it is the
role of the state and society to constantly provide and negotiate these in order for business to
strive. Like a cage in a zoo business need to be reminded that not all animals can be give the
same level of freedom no matter how cute or well dressed they appear to be. A tiger however
cute is still a very deadly beast and it is the same with business no matter how well one dresses
up a oil company it is still producing a product which eventually will dry out and pollute
atmosphere. “Private enterprise requires a supporting infrastructure of laws and permissions, and
more generally the consent of electorates, to pursue its business goals, whatever they may be.”
The last thing they need to be given the key to the cage under the pretence of CSR and corporate
sustainability reporting and then be left to govern themselves.

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Governments and interstate institutions like the federal government in the US and European
union should realise that they play an important art in creating these structures that by hindering
the movement of business that actually help business being sustainable. For fare too long have
governments give over power to private business for them to control and decide what was good
and what was not. This has only resulted in agony and pain for the populations of the world
creating huge scandals, systems without transparency and business who does not realise the
consequences of their actions.

Micheal Porter and Mark Kramer on the concept of Shared Value and why the argument does
not hold

A revisit to one of my older posts. Here I have tried to give some interplay to the dogma that
everything about business is about the strategic advantage and very little has to do with ethics
and the ability for business to operate. I think that it does give food for thought that business role
in society is much more important than business would like to think and that it goes beyond
profit and individual strategic advantages which one can gain in the short run.

Porter and Kramer have published another article on Corporate Social Responsibility called “The
Big Idea: Creating Shared Value” in Harvard Business Review. They proposed a revised CSR
that redefines some of the key notions we have about capitalism and businesses relationship in
society. The concept is called Corporate Shared Value (CSV), as opposed to philanthropy or
social enterprise which, according to them, does not take into account business place and role in
society.

“Shared value, then, is not about personal values. Nor is it about “sharing” the value already
created by firms—a redistribution approach. Instead, it is about expanding the total pool of
economic and social value.”

Porter and Kramer’s view on business is again limited to the impact on business on the local
community and how they directly impact the possibilities for the community to develop.

“A community needs successful businesses to provide jobs and wealth creation opportunities for
its citizens. This interdependence means that public policies that undermine the productivity and
competitiveness of businesses are self-defeating, especially in a global economy where facilities

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and jobs can easily move elsewhere. NGOs and governments have not always appreciated this
connection.”

“The best companies once took on a broad range of roles in meeting the needs of workers,
communities, and supporting businesses. As other social institutions appeared on the scene,
however, these roles fell away or were delegated. Shortening investor time horizons began to
narrow thinking about appropriate investments.”

There is no doubt in my mind that companies have to create shared value. But, and yes there is A
But, has it not always been the truth about business that if it was not able to create shared value it
could not claim legitimacy in the society it was operating? As we have seen a number of
companies outsource their production to places like India and China they have lost their
traditional role in society. Because of this lack of local association, businesses have turned to
other ways to legitimise their operation, strongly encourage by governments, media and critical
stakeholders.

CSR is, in my opinion, more a manifestation that Business to a large degree has lost it local
foundation. Just look at who are engaging themselves in CSR related activities. Global
companies like Wal-Mart, Maersk and BP have all too some extent had to engage in stakeholder
engagement activities in order to emulate local connection. Wal-Mart in the US on placement of
new retail stores, Maersk in relation to works rights in China and BP had to talk to the local
fishermen in the Gulf of Mexico. Common for all is that they have lost the local footing because
of their global reach, but have forced to engage with the communities were they are active.

The article continues to argue

“We need a more sophisticated form of capitalism, one imbued with a social purpose. But that
purpose should arise not out of charity but out of a deeper understanding of competition and
economic value creation. This next evolution in the capitalist model recognizes new and better
ways to develop products, serve markets, and build productive enterprises.”

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My argument would be that we need a less sophisticated form of capitalism that returns the
system to its basic concepts. We have since the 1980ties seen a explosive raise in legislation and
international trade agreements which have created numerous loopholes and possibilities for
companies with the right resources to find ways to cheat the system. For example is the IFRS
guidelines some one thousands pages or the Sarbanes-Oxley act in the United States that have
done nothing to prevent a global financial meltdown. The systems have rather made us disregard
some of the most obvious attempts at fraud because we were all lulled into a false sense of
security. We all thought that the ‘systems’ would protect us from any harm while it in fact made
us even more vulnerable to people that wanted to do evil. Even though sentences for fraud were
increased of up to 20 years in prison did not help us in any way.

So when Porter and Kramer looks for shared value as something that “should supersede
corporate social responsibility (CSR) in guiding the investments of companies in their
communities.” It is more a cry for help because everything else seems to have failed. If we can’t
legislate and control capitalism, we might ask if capitalism would be so kind not to steamroll us
by creating the image that it is in the interest of the economic system to create something called
shared value.

According to the two distinguished gentlemen is “CSR programs focus mostly on reputation and
have only a limited connection to the business, making them hard to justify and maintain over
the long run. In contrast, CSV is integral to a company’s profitability and competitive position. It
leverages the unique resources and expertise of the company to create economic value by
creating social value.” I think the quote in very real terms shows that they have not understood
what CSR is and how it is used in today’s world (and according the KPMG) is CSR not merely a
PR exercise but foremost a system of business ethics and economic common sense. By
economics I mean that business need to have a positive relation to its surroundings in order to be
given ‘license to operate’ and CSR can provide organizations with a management and
communicative framework which will do just that.

So to summarise there is some merit to Porter and Kramer’s argument that companies should
create shared value within the communities that they are active in. However, according to them
the concept requires an adjustment of our current economic system and that business should
embrace CSV as something more that their current CSR activities. Even though they are already

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engaged in the activities that CSV prescribes. In my view is the new concept of shared value
outdated from its outset. It prescribes medicine for a disease that does not exist for patients who
are not interested.

Pros and cons for third-party evaluation of SRI investments

How much should you trust third party evaluation of your SRI portfolio companies? As a SRI
interested investor or researcher you might want to have some their party have a look at the
companies that you are investigating but how much can you really trust their evaluations? This
question comes up more and more frequently as third part evaluations become much more freely
available.

I have compiled a short list of issues that you might want to take a look at when evaluating if the
intelligence can be used in your investigation of companies.

1. Transparency is of cause a major concern and just because a report or paper is made from
somebody outside the company it does not necessary make it more useful. It is not that third-
party investigations are necessary biased but you need approach their reporting in much the same
way you would corporate self-evaluation and reporting, with a fair amount of scepticism. Take a
look at how they present their data and look for their source of information is if the raw material
is available for your own analysis it is the best if they only present the conclusions then take it
with a grain of salt.

2. To what extend does the analysis base its conclusions on Corporate data? A lot of analysis
only have corporate self-reporting as it source but might come up with very different conclusions
that internal analysis came up with. What you need to do is look for triangulation of data sources.
Were interviews or questioners conducted during the process, were experts included and what
was their background (if it is just people from the analyst own group they might not be as
reliable as other experts might be) or were data verified by other means. I recommend that you at

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least look for one other source of aw data other than corporate information. This will show you
that some efforts were put into doing the report and some level of forensics were conducted.

3. The analyst themselves can have a big impact on how reliable the data is. Some analysis are
doing the analysis on a part time basis while others does it for a living. This does not mean that
the work of the amateur cant be very valid it just means that when you evaluate technical data
you might place more reliance on what the professional have to say. The person who sits with
data on finances, CO2-emissions, supply and value chain data have a great deal of routine in
looking at these numbers and have a good idea when they are off the mark so to speak.

4. Standards are a big issue within CSR not just because they are evaluated against but also
because they are seen as normative truths. We all know standards like the Global Compact (GC)
and reporting according to Global Reporting Index (GRI) or the new ISO 26000 but just because
standards are used they o not constitutes the truth. Look at them as a way to present data not as a
factor for goodness. A A+ rating just not represent a higher degree of goodness than a C rating in
GRI it just shows you what corporate data should be available to you for analysis.

5. The Scope of data within CSR is constantly being debated. Some would include everything
others limit their scope to just include the 10 principles in the GC. When you do your analysis
you should scope what you perceive as valid data and collect sources of material that fits this
scope. If you find evidence that is outside the scope but have a impact on your analysis you
should put it aside for further analysis later one when the rest of your investigations have been
included. This exercise will help you not only evaluate your ability to create a correct scope but
also understand the complexity of your target company.

6. Academics or not just academics. I would wish that academics could be seen as beacons of
truth but the fact is that many have to make a living too and some do this by making reports for
different institutions. This does not mean that it is not quality work that is being produced it just
means that you can look at the reporting as you would a academic paper which have been
evaluated by peers. Do not judge a report by the name on the cover.

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IMC and CSR in social media – a potent cocktail

As promised last week I have been looking into how Integrated Marketing Communication
(IMC) and social media can be combined in order to create the optimal conditions for CSR
communication. If one looks at CSR as the ability and willingness of an organization to engage
with its stakeholders in an effort to understand and possible meet their needs the Social media
can play a central role. On the other hand if the organization only looks upon social media as a
way to get the “message across” then they will only venture down the path of failure and
possible ridicule at least among the people who use the media in a professional manor.

In short is IMC is the integration of all the communication of the organization into one single
message. The definition might seem very simple but it is the application of this basic principle,
which most companies struggle. The main issue is that when organization tries to coordinate
their communication into one single voice they often do so by limiting the number of channels.
This has the apparent advantage of maintaining control but at the same time it reduces and to
some extent eliminates the advantages to an IMC approach.

To add to this complexity we have seen a raise of new media, which put even more demands on
organizations and their ability to communicate. Social media means just that that they at their
core are social they demand that organization communicate with and not only inform their
stakeholders.

Social media comes in all sizes and shapes and if you are a person under 50 there is a
overwhelming chance that you are part of the social media sphere on one of the platforms like
LinkedIn, Facebook, Myspace, Twitter or one of the many private platforms which are provided
on state or corporate level. While you might not have signed up for one of these platforms you

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there is a high probability that you have been watching videos on YouTube, looked for
information on Wikipedia or made a call using Skype, either way you are connected. For the
very same reason companies and organizations are very anxious to get access to these media in
order to sell products or improve their brand. Most of these companies, however, look at the
media in much the same way as advertising and while this approach is “easy” it is at the same
time ineffective. Again…Social media means Social so you need to take that serious.

So what do you do with this media if you can’t use the traditional tools to effectively
communicate? Well for one you need to comprehend the scope of the media not only in terms of
potential clients but also all the other people who will be listening in. This also means that you
need to think about suppliers, employees and their families, friends, critical voices, management,
the corporate board, the local community, politics and politicians, the list is long.

Even the most effective and well-staffed organization can’t nurture all their stakeholders all the
time and the good thing is that they do not have to if they are able to understand and use IMC to
their ends. Ones you have found out the What, Why, How and When your next step in the
process is to understand the media its possibilities and limits. I have compiled a list of subjects
that your organization needs to consider.

Listen and Learn – As much as social media is a possibility to get in contact with your most
important stakeholders it is also a place from where you can listen and learn to their advice. This
does not mean that you have to do everything that they suggests but it gives you the possibility to
find out what is the hot topics around your organization. Make sure that you do not only have
one channel to listen from but be active in groups which are discussing some of the same issues
and concerns that you are also dealing with. So for example if you are in the freight forwarder
business you might be interested in alternatives to fossil fuels, cargo space optimisation, Supply
chain management issues, politics around airports, Human resources and management
development, etc. All these subjects have hundreds of interest groups and offer a great possibility
to learn what is going on and maybe get a few ideas along the way.

Lead – Do not be to humble around your business or organization you have to lead the way. You
might thin that there are others who in many was have more resources and have bigger
organizational structures but on the Internet none of this matters. Here you can lead even though

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you are representing just a few people. Leading means that you take up subjects which interest
you and that you engage in discussions when they arise. You come up for suggestions for
positive change (meaning constructive criticism) and take new parameter into the debate when it
halts. You keep you “corporate” image at a safe distance, as you otherwise might come across as
a corporate “lap-dog”. People will know who you are and the place you work at from goggling or
other means of investigation based on what you say and if they think you are interesting to listen
too. It is not that you should keep it a secret where your come from as this might be interpreted
as being dishonest just do not overplay your cards.

Innovate – If you think that you have a good idea or you find somebody out there who comes up
with something do not hesitate to communicate it. You might be surprised how many people who
are willing to help out if you give them the possibility. Be part of the process and do not be
afraid to contribute it is very few ideas that can be used as part of your product line but you will
find that the creative process will make you start to think how you can improve your own
products to sooth your clients even better. Look at social media as a place were you can test your
ideas out and might get them to the first or second step of development but that you need to fine-
tune them in your own workshop.

Invest – If you do not contribute to the social media scene you will eventually be ignored by your
peers. You need to invest your time and intellectual resources in the social media if you are
going to come across as having any credibility. It is not unlike when you have friends if you are
always the person getting help and asking if people can nurture your needs they will eventually
disappear. Show that you are willing and able to contribute to community then other will be
more willing to give you something back.

Get people involved – Get people participating from all levels of your organization not just
senior management (who we all know let their aid do the blogging) and the communication (that
have to) or marketing (who just wants to sell) department. Encourage you colleagues to
contribute about the things that they care about and trust that they will have judgment enough to
be able to distinguish between what to say (f.ex. I ad had a really bad day at work) and what not
to say (f.ex. my boss is the biggest a.. in the world), if necessary teach them the basic ins- and
outs of communicating though social media. Remember that your organization have hired these

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people and trust them well enough to handle your resources so as a point of departure you should
also trust them to communicate about it.

Yes, getting the “message across” – If you want to get the message across in the traditional sense
you should not use social media in order to do so. If you are just using the media as a new type
of add you will not be able to harvest the benefits that the media potentially can spawn for your
organization. Getting the message across in social media means that you are willing and able to
negotiate the message it self. You put some idea or piece of information out there and then it
does no longer belong to you but rather it becomes part of the collective discussion. People
might think it is really good other might not some will ignore you message others wants to
engage and discuss. You have to be able to respond to your stakeholder’s attitude to your piece
of communication and remember that silence is also a way to give feedback and should prompt a
response from you.

Communicate – Last but not least is social media a place where you communicate not for one-
way information dissemination. When people want to listen to you, you might as well have the
kindness to listen back when they try to give you good advice. You might not think much of the
advice you are getting but that does not mean that you bring people down or tall them of see it as
a genuine interest.

ROI – The return-on-investment for your social media efforts can come from many directions.
One thing is of cause your ability to communicate with your stakeholders, but it also enables you
to build a reputation that will serve you well if you get in trouble. Just think if people had rallied
around some of the companies that get in trouble if they had had a follower group who were
willing to stand up for the organizations. Were would the BP brand be today if stakeholders in
the Mexican gulf had said that “mistakes happens but we continue to trust that they have our best
interest in mind” even after the disaster. Today the BP brand is at an all time low because they
made the choice to keep their stakeholders from communicating with them when things went
from bad to worse. Had they had a different strategy, which took into account all the
organizations communication, they would properly be able to claim a much different outcome.

My last comment will be that social media is not the universal communicative tool that will solve
all your issues management cases. Rather it is a supplement to all the other activities that your

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organization engage in from direct sales, advertising, shareholder meetings, CSR, direct
marketing, conferences, etc. everywhere members of your organization communicate they are
part of the co-creation of the corporate image.

Getting to the early adaptor using IMC – Strategies for

implementing CSR

When trying to implement any kind of new innovation within an organization or in a social
context it is not without importance how and with what tools this is done. With CSR or Business
ethics it is even more important because it is hard if not impossible to remove or erase what has
already been done. What is important is that you get the ethics of your business into the DNA of
your organization, as Wayne Visser would put it. While this might not seem a like an enormous
task it is not as complicated as it might seem. It might take a while for it to sink in but if you
keep it simple and stay close to your strategy at hand you will get there eventually.

First of all one needs a holistic but structured approach. What you need to do is to answer the
What, Why and How and When of your organizational CSR. This is not to say that this is a
simple four step model or the only way of finding out what is important but it makes sense to
establish a clear platform from were your business ethics can be expressed.

You need to define what is important to your organization. If you are consulting company it
might make much sense for your organizations members to talk about carbon footprint even
though it is a very ‘hot’-subject in the CSR community. What might make more sense is to talk
about how you see your relationship with the customer, how far will you go in coaching them,
and at what point will it be important to say stop or escalate a issue to your management. If you
are a designer it might be important to look into the people who produce your cloth. Are their
any child labour and what about women’s rights in the factories that produce your unique
designs? It is the ‘What’ is important to my company, and to me that should be in focus not what
is the hot issue in the news or what the marketing department tells you will sell.

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When you have made it clear what you stand for you need to investigate why these issues are
important to You and not somebody else. It might seem trivial but if you can’t answer why
something is important it will be really hard to persuade your employees, management,
customers and suppliers why change is such a great idea. There is no one-size-fits-all on the Why
of CSR and Business ethics. You might have personal reasons why this issue is important or it
might be part of the collective memory of your organization the central issue is that it is an
ethical issue that you feel strongly about. This dos not mean that you should be blind for other
would be subjects out there, but if you are going to build you business on ethical grounds than it
should at least have a strong foundation and answering the Why will help you do just that.

What you have looked at the What and Why you turn to How. You have gathered some thought
on how you are going to interpret the issues, which are important to you into some kind of
guideline for the whole organization. The How can have many forms it can be codes of conduct
or code or ethics or it can be less visible as part of the standard operating procedures that you ask
everybody to follow. In my experience the later is the better because it directly influences human
behaviour, but one as an organization you might have to make a clear statement both inside and
outside its boundaries and then a code could be a good option. Both because it create a clear
statement to your employees and management on what is acceptable behaviour but also because
it tells your external stakeholders and not least your customers what you stand for.

Last one in the initial exercise is to plan the When and this is where you need to think about your
early adaptors. You now know your What, Why and How of your organizational ethics now you
need to let your invention grow. You know that your idea about the ethics of your organization is
founded in its DNA and the idea behind and know that it is rooted in your product and cultural
heritage. This means that you need to identify who you want to communicate with and find an
appropriate channel that will enable you to reach these people.

However, you need to communicate the same message to all stakeholders not only the ones that
you want to adopt your innovation. As you only have one opportunity to communicate your
message and reach the people who will act as agents for change you have to use all the channels
at your disposal. Integrated Marketing Communication is concept that is designed to make all
aspects of marketing and internal communication such as advertising, publications, sales
promotion, public relations, issues management, media relations, direct marketing and not least

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CSR to work together as one unified and powerful force, rather than permitting each to work in
isolation. The combination of marketing and public relations tools lets an organization influence
for instance the image, public reputation and employee attitudes through the consistence and
persistence of a few powerful messages.

“[IMC] is a process which involves the management and organization of all ”agents” in the
analysis, planning, implementation and control of all marketing communication contacts, media,
messages and promotional tools focused at selected target audiences in such a way as to derive
the greatest enhancement and coherence of marketing communication effort in achieving
predetermined product and marketing communication objectives.” (joep Cornelissen, 2008
among others)

The selected audience in this case is your agents of change. So even though all members of your
audience will have the information at hand about what you are communicating it is the agent
who is in your mind when you design your message. He or she properly already known to you or
at least your vision of such a person, he is competent both as a person but also as a technician. It
is a respected person who has their own values but is loyal giving the person credibility among
his peers. It is a person who lives for the future and is willing to take a limited risk in trying
something new her or his fuel is passion and the willingness and ability to transform a vision into
something more tangible (such as your vision for a ethical business platform). It is a self-starter
and motivator that do need fuel to run but ones started will interpret your vision and make it his
or her own.

One of the main features about the change agent is that it does not have to be a employee it can
be a customer who likes your product and buys in to your corporate culture and want to be
evolved. It can be a supplier who sees the long-term benefit of a close relationship with your
organization or a junior member of your staff who buys into your idea. The innovation can get
hold anywhere where there is a change agent present who displays the features that you are
looking for.

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The concept of Engendered CSR

The debate between different schools of thought on what gender really is has been fought for
several decades (Blau & Ferber, 1986, Rosener, 1990, McCabe, 2006, Yukl, 2010:468f). Within
research there are different opinions on how the behaviour of men and women should be
interpreted and explained. Are gender traits to be understood to differences in biology e.g. sex or
is it something that we as a society have formulated as part of some grand discourse or is it a
mixture of many different contributing factors (Giddens, 1989:158, Hearn, 1998). When
mapping the terrain of gender research there are several path one can take. Some researchers
have shown that behaviour between primates has similarities with how human behave or the
behavioural patterns are closely linked to the biological sex. In this understanding we are as
humans biological predisposed for certain kinds of behaviour, which unconsciously directs us
(Blau & Ferber, 1986:16f). But these arguments do not provide a framework for how to explain
the behavioural patterns of homosexuals, who in many ways display behaviour which is opposed
to the biological sex or leave room for social interaction that contradicts the norms contributed to
the individual sex (Hearn, 1998).

While there is no doubt that there are biological differences between men and women, the
reduction of traits to mere biology does not confront some of the more complex issues that
organizations are faced with such as male/female adaption to change or their ability to be
receptive to the signals coming from the organizations environment. The idea that the social
interaction between primates and that between humans should be equivalent could seem like a
long stretch, but the ideas is far from foreign in the argumentation for or against equal rights and
opportunities today (Yukl, 2010:470). The biological sex perspective becomes apparent and
relevant when discussing pregnancy and maternity leave in relation to career advancement or
when referring to some jobs being to “though” for women to handle.

Another perspective that research has chosen to deal with gender differences is by ignoring a
gender impact all together. This school of thought is especially widespread within economic
theory where gender is by most schools believed to have no impact or is just ignored all together
(Lorenzen, et al, 2004, Douma & Schreuder, 2004). This so-called rational approach is by far the

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most widespread in the business community as it reduces the complexity that a gender approach
brings to understanding organizational behaviour (Blau & Ferber, 1986:3ff). However, even with
this in mind the statement by Gary Powel (1990) that “Success in today’s highly competitive
marketplace calls for organizations to make best use of the talent available to them. To do this,
they need to identify, develop, encourage, and promote the most effective managers, regardless
of sex.” is true for whatever perception one subscribes to. The ability and willingness to organize
in ways that utilize the resources that are available to its full potential is nothing new in business.
But realising that a gender approach could free up unrealised resources and bring new
perspectives is not something which business has worked with.

The concept of Engendered CSR have been used from time to time when it comes to looking at
how gender and CSR could potentially be combined in an effort to bring gender to the CSR
debate. In my mind gender should play a central role in any organizations work or at least it
should be integrated into the corporate strategy at a significant high level.

An engendered CSR approach would imply that business, associates gender with the
performance and positive behaviour that feminine and masculine traits bring to the organization.
This means that I believe that gender do play a part in how business perform and that managers
and boards can actively influence their organizational results by adopting a strategic gender
approach. In essence a business case for engendering the organization needs to be established
which managers can relate to, and perceive as useful to their organizations development. This
would mean that instead of adopting a rights and moral argument for working with men and
women, organizations would take a strategic approach with business needs at its core. This is at
least to me the central theme in the concept when combining gender research and practice with
CSR.

Engendered CSR is subsequently understood as a way of thinking about the organization as

made up of men and women that in different ways bring positive and negative behaviour to the
organization and its interaction with its stakeholders, and by working strategically with these
different traits organizations can influence their overall performance.

The strategic business areas that according to my own and research done by others and were
gender plays a significant part or could play a central role in organizational development are.

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 Governance especially within auditing and assurance work

 Quality recruitment
 Positive relations with Civil Society and other stakeholder agents
 Productivity
 Staff turnover
 Fraud reduction
 Innovation
 Supply chain management
 Development of new markets and products
 Financial performance
 Stakeholder engagement

This is far from a complete list but is the areas, which are supported by some research. There is
still some way to go before we can show causality between gender and these central performance
areas but there is reason to think that such a link exists.

It is now that CSR have to prove its value

Europe and the US is standing on the brink of bankruptcy. Countries like Greece, Spain and
Ireland have already over exceeded the boundaries for what can be accepted as good governance
by any standard and the US is struggling with internal political issues that have the potential of
destabilising the whole world. Unemployment is staggering high with Spain leading at over 21%
unemployment and with a situation among younger people, which is even worse at over 40%
having problems finding work. Together with the Greek currency bond being rated as junk by
some of the big international rating companies the basic outlook bleak if not hopeless.

If the problems were only confined to a few countries it would not have matter that much but in a
globalised world we are all interconnected and if these states fall into national bankruptcy we

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will all suffer. First of all will countries like Italy and Ireland be some of the first to go under a
and these will be closely followed by others in the European region. And with 11 of the Euro 27
countries having unemployment rates in excess of 10 % (4 over 15%) there is little or nothing to
buffer any kind of downturn.

There are of cause some economies that are doing better than others but in general economies are
strained and there have been little in terms of economic recovery since the crisis in 2008.
Basically the states have used up all or close to all their resources in order to cope with the last
crisis and they will have close to zero chance of making it through another.

So why should companies care? Their obligations are not to the state or the currently sitting
Government so why should they bail out the results of irresponsible economic practices.

Well first of all there will be a direct impact on business if they do nothing. A state in bankruptcy
will not be ale to uphold its trade agreement with companies meaning potential huge losses. They
will try to find similar products at a cheaper rate such as copy-medicine or they will stop
treatment all together. There will be little or no investment in infrastructure in areas like energy,
roads and water meaning that the ability to conduct an efficient business operation will be
reduced.

On a longer term basis it will mean increased corruption and poor governance as countries will
be unable to effective police its own laws. A bankrupt state will also men that the country will be
less able to educate their own population which have a effect on business as they will be unable
to recruit qualified people.

So what can business do? First of all they can start by paying tax in the countries were their
operations and customers are. A significant number of companies in Europe and the US are not
paying the tax that they should if companies like Google, IBM, Morgan Stanley, DHL and
Apple. Companies that have gotten millions in government hand-outs or stimulus money as it’s
called should start paying back and not continue to hide money away in tax havens. If they just
paid the tax, as they should have done in the first place all our trouble would basically be over.
Companies should not be overtaxed but they should at least pay the basic rate in the country that
they are situated in. Transfer pricing and other trick of the trade have to be governed in a way
that will allow countries whom are providing the educated labor, markets, infrastructure and

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social systems benefits also gets the funds to maintain these systems. Tax systems have for too
long been a competitive advantage and these issues have to be effectively resolved.

The biggest of the corporations need to live what it means to have economic power, which is
bigger than most countries. Big multinational companies like Shell, Wal-Mart, Exxon Mobile,
AXA, General Electric, IBM, Citigroup and Bank of America that are bigger economic entities
than countries like New Zealand, Vietnam and Morocco have to live up to this responsibility.
One cannot continue to act like a “normal” business when ones impact on demographics and
society is so great. These entities are outside our democratic control and while I do not believe
that they would willingly be engaged in wrongdoing I do believe that we need to increase
transparency to the level that we have on governmental level in order for stakeholder to truly
evaluate the performance of these companies. As Andrew Ross Sorkin so adequately put it these
companies are simply “Too Big To fail” and in 2007-08 we saw what happens when they doo.
Still today we have a hard time believing that companies like Enron and Lehmann Brothers do
not exist.

Third corporations have to integrate their CSR. A quick look at CSR reporting will show that
most corporation still view their impact and responsibility to society as part of their everyday
thinking. When managers and executives take decisions in big transnational companies we have
too often seen that they do not have the necessary understanding and comprehension of the effect
that their actions will have on society. Time and time again we have witnessed how highly
professional business leaders have created situations which they themselves could not
comprehend or even fully understood that had significant implication for a much wider group of
people than original anticipated. Therefore the “Responsibility of the Businessman” as Bowen
describes it needs to be embedded in the very basics of business thinking and education. We
cannot keep on having CSR as a add-on to other activities that corporations are engaged in it has
to be like Visser so will put it embedded in the corporate DNA.

Some might claim that these proposals are more or less communism or at least socialism in
disguise. But I think that the facts speak for themselves when I say that the current way we are
handling capitalism is not working to our advantage. I do not speak against people making

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money of their hard efforts or that some people are just smarter and better at doing business than
others and should be rewarded as such. What I’m working for is business done on the basis of
having talent and knowledge, which is hard if not impossible for others to duplicate. Not as it
seems to be the case today that who ever is the one with the lowest moral and willingness to
exploit the ability to withhold information to others that come out on top.

Dynamic CSR reporting the future of stakeholder engagement –

Introducing the CSR Sustainability Index

Here is an idea… What if we reported on the ability of organizations as a Corporate Citizen

Live? Corporations are already evaluated on a minute-by-minute basis through the stock market
so why not transfer this basic idea to the realm of CSR and Sustainability.

The idea would be to have a series of indicators on which a corporation can be evaluated through
social media and other ways of interacting with their stakeholders. Some areas would have a lot
of activity while others would only be changed on a weekly or monthly basis. Just like volatility
on the stock market which looks at how much a certain stock is traded the indicator for
sustainability would only change when somebody evaluate or leaves a comment.

Like the Flameindex that looks at poor or critical media coverage the CSR Sustainability index
would look into how certain companies did on a overall sustainability agenda. But it would

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incorporate an extra layer which would cover the individual areas of some of the well knows
measurements of sustainability and governance.

My suggestion would be to monitor individual companies on several social media channels,

coupled with the company’s own PR communication, NGO reporting, College and University
Students reports analysis and professional analysts evaluation of corporate performance. The
idea is to cover as many of the organizational stakeholders as possible while at the same time
creating an easy point of access for further analysis and investigation.

For example, if a Professional analyst raises a red flag in the area of governance in a company a
further investigation by other stakeholders might uncover problems in the area of labour law and
corruption within the same company. The problem area would not have been uncovered if there
had not been a red flag warning in the first place in a area normally not covered in conventional
sustainability reporting.

On the other hand if a company had a best practice on how to combat child labour in their supply
chain this knowledge could be flagged and other organizations could learn and adapt this
knowledge to their own operational practices.

The platform would of cause be web-based providing live data on the largest companies in the
world who are also the most exposed to global sustainability issues. Using the Global Compact
as a starting point it would be the ten guiding principles that would form the basis of the index.

Human Rights

Principle 1: Businesses should support and respect the protection of internationally proclaimed
human rights.

Principle 2: make sure that they are not complicit in human rights abuses.

(These principles could be monitored through tapping into local/global news channels were the
company is active, monitoring local NGO activity, Whistleblowing on social media and own
corporate reporting.)

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Labour

Principle 3: Businesses should uphold the freedom of association and the effective recognition of
the right to collective bargaining;

Principle 4: the elimination of all forms of forced and compulsory labour;

Principle 5: the effective abolition of child labour; and

Principle 6: the elimination of discrimination in respect of employment and occupation.

(Labour unions could be provided with an excellent channel for reporting abuses they cant
communicate through the corporate pipeline but would like to have attention on. The CSR
Sustainability index would provide an up to date indicator on how the company performed right
now so that action can be taken in order to remedy the issue. Under normal circumstances it
could take weeks, months or even years before an issue makes the media. But though the index it
would be possible to raise awareness a lot faster just because it is linked to so many other
channels of communication and organized in a way that makes it possible to get a fast overview
of issues of concern.)

Environment

Principle 7: Businesses should support a precautionary approach to environmental challenges;

Principle 8: undertake initiatives to promote greater environmental responsibility; and

Principle 9: encourage the development and diffusion of environmentally friendly technologies.

(Environmental reporting has been around for many years and there are several channels, which
can provide information on corporate environmental performance. There is of cause the
organizations own reporting, which will be important, but this information should be seen in the
light of what NGO say, municipalities, news channels and whistleblowers have to say. This
would create a reasonable way of evaluating a company environmental impact and if that how
this measures up against the expectations of its stakeholders. In many cases we tend to look upon
environmental issues disconnected from the specific industry meaning that we look upon the
carbon emissions of a clothing manufacturing company measure up against a producer of

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computer components, but who says that this is a important factor for the stakeholders? So, the
reporting should of cause reflect the expectations of the people who have the most interest in the
performance of the organization and not some universal agreed standard that tells one close to
nothing.)

Anti-Corruption

Principle 10: Businesses should work against corruption in all its forms, including extortion and
bribery.

(One of the least transparent areas of the Global Compact and the one in my mind with the most
potential. While the issue of corruption is less salient in the developed world it is a problem that
affects all companies who work in an international context. The problems that corporations faced
are backed by the resent publish annual report by transparency international that documents the
impact of corrupt behaviour. As Huguette Labelle, Chair of Transparency International states,
“During 2010 we continued to see the terrible cost of corruption. Sixty-four million more people
were pushed into poverty since the financial crisis struck, according to the World Bank. Such
tragedies make us ever more resolved to make a difference through our work.”. But as we all
know these things are interconnected and one cannot look upon corruption without also taking
into account, at least at some level, human and labour rights, environmental issues and not least
education and gender. So the complexity of anti-corruption is difficult to comprehend and get a
real overview of without some kind of systematic approach with the CSR sustainability Index
such a platform would be provided at least in the form of information that can feed more in-
depth investigations.

A think a unifying approach is appealing as I for one have a difficult time finding out what is PR,
Spin and lobbyism from all the channels out there wanting my attention. I think it would also be
appealing as It would provide a more “true” picture of who is really the leaders on the
“goodness” market and how is just good at talking about how good they are.

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7 Issues that CSR needs to address if it is to be accepted by the mainstream business community

There are some hard questions that CSR needs to give real answers to in the coming years. As
time goes it is become harder and harder to change any poor practices which are already
becoming embedded in governance processes around the world.

1. There is a lack of definition of CSR. We can’t measure what we cant define and CSR is
not a exception in the past I have touched upon this issue as every year seem to come up
with a new way of defining CSR normally because some new interest group have tried to
make their mark.

2. CSR have rapidly become another part of the ever-growing Public Relations industry. As
CSR is a none-definable concept is has become the task of the communication specialists
to come up with answers to questions raised be the corporate stakeholders. If we are to
develop CSR in any meaningful context both in the terms of business development and in
relation to sustainability in a wider context we need to focus on the activities of CSR
rather than the branding of an organization or product to a very narrow stakeholder
group.

3. Thanks to Porter and Kramer CSR is by many business people being synonymous with
strategic philanthropy. Basically giving money away in the belief that in the long term
they will return to the company in the form of customers and increased sales. With this
very narrow view of the concept is it of cause to activate the whole Business-to-Business
part of business. Because there is no real incentive for engagement in strategic
philanthropy when you do not have any involvement with “real” customers.

4. CSR needs to address the neoliberal argument that CSR is “giving the owners money
away” if it is to gain any real footing in a broader sense. In many ways this is already
happening as the concept have teamed up with ethics and corporate governance, strongly
supported by several high-profile corporate scandals, which have highlighted the need for
better governance. If CSR is to succeed it need to outlive it-self. This might seem an odd
thing to say but if companies and organizations are going to be truly socially responsible
they need not to think about whether a decision is good or bad in the context of social or

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ethical ground but it as to be part of how the organizations DNA. How it thinks, believe
and communicate about and to all its stakeholders.

5. CSR needs to be though in a global context and not just something for that is part of the
developing world. In more and more cases CSR is being used as means to keep
developing countries out of developed countries economies. As trade-barriers are being
lowered on a global scale new forms of barriers are being raised in the form of standards
and systems, which companies and not the countries have to abide by. This forms a
second semi-legal layer, which is hard to enforce by any objective party and even harder
to efficiently to govern. This is a form of governmentality, which is outside the normal
control of individual governments, but is superimposed on countries economics by
multinational corporations in the effort to live up to some ethical guidelines they
themselves have invented. While e might argue that in part of the world there are weak
governments were corporations needs to impose rules, which are above local law it is a
dangerous path which the professionals and academics of working in the field needs to
address.

6. The issue ever elusive Business case for CSR also needs to be confronted. In my
experience and I believe that this is also shown in scientific surveys is something
profitable because business wants it to be so. Just having a webpage and a annual report
that describes a series of activities is just not good enough. If managers want to make a
profit of their CSR activities they need to focus on the things that matter. How do one
think that telecommunication for bottom of the pyramid customers became a reality or
the widespread acceptance of the business model of microfinance came to be? It is
because it was directly linked to a clear need and ability of the company to do well by
doing good and not some philanthropic endeavour which was more or less linked to the
core business. If a company wants to make CSR profitable it need to use it resources to
make it so and not leave it to the Marketing, Human Resource or Communication
department to construct a more or less proven business case.

7. Law or self-regulation? Is rapidly becoming a concern that both companies and the
governments need to address. Should be let companies become so powerful that they can
dictate democratic governments way of governing their countries or should we let

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intergovernmental institutions like the UN, EU or OECD decide? And can these
institutions even enforce any legislation they might come up with? These are central
issues, which will require some careful thinking. On one side we are unable to effectively
govern social, environmental and governance issues on a global scale on the other side
we are reluctant to just leave it to capitalism and a neoliberal dogma to solve things out.
Some institutional proponents argue that we should have interstate regulations on these
central issues of corporate governance. Maybe even a global tax system, but it would
seem to be just another layer of inefficiency, which is both bureaucracy and
unmanageable.

Lessons learned from legislation on CSR

Legislation or voluntary approaches to CSR have been debated for several decades and it would
seem that there is no end to the debate in sight. In Denmark legislation have been in place for a
couple of years (since 2008) and the first research results have been published on how the work
is progressing

Basically companies in Denmark that is required by law to report on their CSR activities are
coming from Accounting class D and above. These are companies that have their stock traded on
the regulated market in the EU and state-owned public limited companies that can exceed at least
two of the following criteria:

 Total assets/liabilities of 19.2 million EUR

 Have a net revenue of 38,3 million EUR

 An average of at least 250 full-time employees

In Denmark the number of companies that comes within these criteria is around 1250.

If a company falls within these categories they have account for three dimensions on their CSR
efforts in the management review of the annual report or as a supplementary report. Under all

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circumstances it needs to be publically accessible. The three dimensions which needs to be
included are:

1. The organizations CSR policies

2. How these policies are translated into Action

3. What the Results have been on their activities.

If the company choose a supplementary report through the Global Compact, Communication on
Progress the Global Report initiative or any other for of reporting standard this should be
included in the management review under all circumstances.

The research done have mainly focused on the ability of companies to live up to the three
dimensions of the CSR legislation and is not concerned with the quality or if the reporting really
gives a accurate picture of the corporate CSR efforts. Furthermore a sample test was used which
included 142 companies of the total 1250.

The findings was that only 82% of the sampled companies reported on their CSR activities in the
management review even though it is a mandatory part of the legislation to at least mention that
the company was active in the area. Also interesting was that about 9% referred to the UN
Global Compact were as none of the companies used the UN Principles for Responsible
Investment (UNPRI) Communication on Progress which is used as screen in several SRI
portfolios around the world. This would indicate that CSR is not seen as a tool for attracting
investments or it is not seen as a possible avenue to get access to specific institutional investors
who specialise in these kinds of investments.

Another interesting element is that there seem to be more talk and less action on CSR issues.
When the research looked into how the themes Environment and Climate, Human Rights,
Labour rights, Anti-Corruption (all four the themes of the UN Global Compact) and how social
issues aimed at the danish workplace was taken into account. Within the companies CSR work it
was interesting to see how it would seem that they put more emphasis on the communication part
(policies) than really putting things into reality (action) and even less on actually measuring the
results. This would indicate that CSR to a large extend is believed to a communicative exercise
rather rather than a strategic development tool.

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For the companies that did not conform to the legislation the excuses could be separated in to the
following categories:

Timing – There was not enough time to get the system in place.

Lack of Awareness – The organization did not read the  legislation careful enough and therefor
did not comply.

Documentation – That the organization did not know how to compile date in a systematic way.

Regulation would not be enforced – Some thought that the regulation would be ‘soft’ and there
would be a prolonged implementation period.

Resources – That there was not enough resources in the company to live up to all three
dimensions of the legislation.

Priorities – That CSR is not a priority within the organization and such pressure should come
from the customers and CEO in order for the organization as a whole to react.

It is interesting to follow the evolution of the Danish case because so many other countries are
looking into the same subject (for instance Australia and India). What will become of the ‘law
track’ we can only guess but until now it would seem that most companies have not discovered
the potential of having a socially sustainable business approach.

Corporate Volunteering – news for European CSR

The trend of Corporate Volunteering have reach the shores of europe and have taken many
different forms. in short is it about it a collaborative arrangement in which a company provides
services for a cultural or humanitarian organization such as Red Cross or a activity in the local
community. In the US this have been part of the social system for decades but in Europe the
phenomena is much less organized or seen as playing any part in the social system in general.
That is until now.

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The social system is changing as big NGOs and local communities are starting to organize
volunteering on a larger and more integrated way as part of a general trend towards more liberal
forms of government. We se more and more core social activities being performed by people
who have a ‘good hart’ rather than a formal education. The field of volunteer activities are quite
broad ranging from helping out at the local school when the teacher is off to taking care of the
elderly and sick.

As the a local festival outside copenhagen that for years have been based on you volunteers to
make out the bulk of the workforce tries to sell the message

“There are gains for all partners involved in corporate volunteering. Roskilde Festival is assisted
in the execution and qualification the festival, the company’s image is strengthened, as is its
ability to attract qualified labour, and employees are more motivated and proud of their
workplace.”

Uses of Social media in CSR communication

Lets say that we believe that CSR is a form of stakeholder engagement which companies can
utilise in order to structure and work both strategically and structured with reaching persons and
organizations who have a interest in the organizations actions. Then how does Social media
come in and how can we utilise platforms like twitter, Facebook, LinkedIn and blogs in order to
reach people who have a stake?

First of all there is the central theme within CSR, that in order to be perceived as a socially
responsible towards society a company or organization needs to know and communicate with
their stakeholders. As stated in the ISO 26000 definition an organizations CSR effort is defined
as;

“Responsibility of an organization for the impacts of its decisions and activities on society and
the environment, through transparent and ethical behaviour that contributes to sustainable
development, including health and the welfare of society; takes into account the expectations of

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stakeholders; is in compliance with applicable law and consistent with international norms of
behaviour; and is integrated throughout the organization and practiced in its relationships.

But in order to do all these activities an organization needs to adapt systems that enable them to
get in contact and maintain communication with people who have an interest in its continued
operations. Such a system could be social media, which offers a wide range of opportunities for
sustained and progressive communication with stakeholders. But the approach is only use-full if
the organization is prepared to embrace its possibilities and live with its consequences.

First:

Social media is highly suitable to use in combination with an Integrated Market Communication
(IMC) effort. There are numerous examples were social media is used to effectively
communicate with salient stakeholders. Just think of fan-art forums or Facebook groups
dedicated to different brands. Such as a page dedicated to small Lego characters or fan art
dedicated to the battle between Pepsi and Coca-cola. While some companies have tried to ban
and distance themselves from these groups they are a enormous source of information about the
people how are most interested in what your organization is up to, good or bad.

So a good social media communication strategy would be to monitor and systematically collect
information that is posted by the fans. And from time to time but not to often ask about their
opinion on different subjects from ne products to issues being discussed in the media. These
people might be very critical of your action but they are dedicated and loyal to your brand and
would for the most part whish the best for its continued prosperity. So do not miss the
opportunity to get them act like ambassadors for your organization they have much more
credibility than you would ever hope for.

Second:

Social media is good for creating your own story. Blogs and twitter can create a sense of
closeness to the people behind the reports and official statements. One thing is to say that you

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have done things in your supply chain in the annual report another is to make a blog entry or a
tweet when you are in the field doing social audits. Most interested stakeholders would like to
help you out in your quest to improve your business ethics record so why not use this to your
advantage. Live blogging or creating a podcast from a field visit, will make your audit even
better and create attention around what you are trying to achieve instead of being a reactive
activity you have used the media to be proactive.

Of cause one have to remember that such activities cost resources and time spend on
communicating with people who might or might not have something concrete to contribute with.
But even though one might not have any direct benefit from this communication it will provide
valuable intelligence on issues of interest for the organization.

Third:

Social media is an extra channel in times of trouble. When things starts to go wrong and an
organization are under attack from the media it can be difficult if not impossible to get voice.
One of the most important things in time of a media crisis is to get the organizations side of the
story out to the people who need to know. Journalists tend to focus one side of the story and in
complex cases it can be difficult if not impossible to get all the nuances out there. The
organizations credibility will always be questioned when it tries to communicate it is therefor
important to have a established platform that was active before the crisis started, it is just not
credible to start to communicate only because the organization does not think it gets enough
airtime.

The most successful organization within social media communication have started their efforts
because they thought it was a good way to get in touch with its stakeholders not because it had a
need to explain why it is exposed to bad press.

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Forth:

Using Social media means access to top management. Do not put the intern in charge of the
organization social media presence! While it sounds obvious it is often the gut reaction of top
management to put the young in charge of the day-to-day business of running the different social
platforms that it is active in. Sooner or later there will be issues that needs to reaction of
management and then the communication that comes out does not have any or very little
relationship with what have been communicated before. One of the major benefits for the
organization is that it can show consistency, coherence in it communication through the effective
use of Social media. Within communication theory we talk about that organization should avoid
a gap between managers vision of the where its going, the culture of organization in terms of
employees and the image that it is trying to display towards its stakeholders. If the organization
does not take charge of its own communication these gaps will expand and in time it will
challenge its legitimacy and maybe even its ‘licence to operate’.

Fifth

Remember that the majority of your audience consists of your own employees. The most
interested stakeholders in your communication are the people who work for the organization.
When you try to communicate a message to the outside you are at the same time entertaining
your internal audience. One can talk of auto-communication, as different codes that is
transmitted and understood differently be different audiences. The process that is originally
intended for a external audience is transformed by the employees into self-referential and self-
confirming images of how they perceive the organization now and in the future. Where self-
referential means the ability of employees and other stakeholders to subscribe or un-subscribe to
different images of the organization in order to create a certain identity.

So when you write on your blog write for your employees they are both your most loyal and
most critical audience. If you trust them and them you they will provide you valuable insights
into the engine room of the organization, which you would never know of through normal
channels. Make sure that you give them the opportunity to be anonymous at least in the start
when you gain trust.

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Sixth:

The ability to measure your results could be the most important thing you can do. If you do not
measure, compile and analyse your social media all your efforts could be wasted. Remember that
it is the strategic use of social media that is interesting not that you has engaged in random
activities on the web. Have standardised reporting on traffic, comments, demographics, subjects,
etc. and hold regular meetings on how you are going to use the media tactically and how it
relates to the strategy that you have put out. Make sure that you organize in a way that ensures
that the people internally that have a stake in the social media are also engaged in its strategic
development such as Marketing, Sales, HR, Communication departments. Their input will give
added value to the intelligence that is taken of the media and how it should be interpreted in a
wider context.

So if you want to use social media to communicate around and about the impacts of the
organizations decisions and activities on society and the environment make sure that you know
and understand how to use the tool to its full capacity.

Back to the Why of CSR – Its the story that matters

From time to time it can be difficult to establish what it is all good for why is it that we are so
focused on the business case, brand value, if we are listed on the FTSE4Good or not etc. We tend
to be preoccupied with the technicalities or the How of CSR and not as much on the Why. The
Why tend to be taken for granted because there is so much pressure on showing that we can be
transparent, accountable or that we have a effective plan for our work. But when we are forced to
think about and explain why corporations are engaging actively in CSR and goes beyond the
mere management of stakeholders we come back to the basics of telling the story of doing good.

I have never met manager or business leaders who have not taken a stand on their business
impact on the society they are part of. Some would claim that paying tax would be sufficient
others have a broader perspective on the thinking, but common for them all is that they have
taken a stand and that they have a personal story to tell that explain that standpoint. They like all
of us have focused on the Why while we might disagree or agree on the standpoint they do have

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a personal story to tell that have shaped their opinion and convinced them why their standpoint is
the best solution to business role in society.

Now I could leap into a greater discussion on the different discourses of CSR explaining the pros
and cons of Friedman or Porter and Kramers standpoints or maybe explain why Ruggie is such a
proponent of political CR. But I will refrain from this discussion and just conclude that we have
different perspective on the role of business and even though one manager might be reluctant and
sceptical towards CSR in general, most large business are in some way engaged in the subject
anyway. So even though management might be pretending not to be religious about CSR when
they fold their hands they are still praying.

So back to the first question and the Why of CSR. In my opinion it is all about the story about
the journey the corporation describes and the willingness to share this with the rest of the world.
Basically explaining to the world about your individual Why. At the Global Compact website
there are hundreds of stories about the Why of CSR some from companies that have integrated
CSR in all parts and corners of their business others have only focused on a very narrow part of
the CSR spectrum.

One of the places were one can find stories about the corporate CSR journey is in the Global
Compact (GC) case story archive. The story being told are of cause about the ten focus areas of
the GC and how different organizations work with each of these elements individually. The idea
is that best practice can be shared among the participants and beyond. But the story behind the
story is about how some stories are told better or have a greater appeal than others. For example
have most of the storytellers a real and definite focus on environmental issues and especially
their carbon footprint, but almost no one have a story to tell about their anti-corruption work.
This differences in corporate attention gives a real picture of the Why organization engage in
CSR activities.

The same picture is evident when one examines the Communication on Progress, which is a
precondition for continued membership of the GC. Corporation just seems to focus more on the
areas were their most salient stakeholders have their main attention. In research done by Ralf
Barkemeyer on CSR in the context of international development he found that the main focus
was on environmental issues followed Human rights and Labour rights and last to come was

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anti-corruption. Another interesting thing that came out of the survey was that a very large
proportion of the issues addressed by EU companies were directed at the home country and not
as one might think at the countries were the corporation was most active.

This tells us that the Why of CSR should be found not in the effort top do well by doing good but
rather as a way for companies to confront some of the issues that their most salient stakeholders
have with the company. These can be customers who demand specific actions, but more likely it
is home country media who highlight specific issues, which have the possibility of threatening to
companies’ ability to operate efficiently. In resent years the majority of this pressure have been
channelled through institutional investors who have a increased stake in ethical investments.
While individual shareholders might not be influenced by corporate decisions the case is not the
same for larger investors such as pension funds or large unions. The reason why we make this
distinction is based on some of the characteristics of these two investor groups.

Individual investors tend not to know their investments portfolio ethical performance. While they
might know a great deal about the economic performance they have little or no knowledge or for
that matter interest in the CSR work that the company is involved in. The reason is that most
investors (excluding shareholder activists) have a very limited view on corporate performance
stretching for a short period of time where they expect their stock to perform. This strategy
encourages companies to focus on indicators, which they can influence with relative ease
compared with larger problems one can find with the area of ethics and culture.

Institutional investors have a clear interest in long-term engagement meaning more than five
years. First of all because institutional investors are normally able to invest relative large sums of
money in a company and by that have a opportunity to influence its strategic development.
Second, as a institutional investor you are under constant scrutiny by the press and other media
on how you put together your investment portfolio. There have been several instances were
investors have been forced first by the press and later one by their own stakeholders to change
their investment strategy. Just take the Norwegian oil-fund, which I have blogged about some
months ago and their engagement in Burma.

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The lesson is that the Why of CSR is about the tory one tells or let other tell about the
organization. That organizations ethical performance is much more normative that we would like
to think and that if we like stories about Ecology or Human rights there will also build a pressure
for corporation to act within these areas. And that if we are enough that think the same way
about a issue we will change corporate behaviour even though it is against the monetary logic of
the moment.

Integrating or delegating the CSR effort what should companies do?

For most companies CSR is believed to be an expense rather than a investment. This has resulted
in quite different approaches to the CSR effort. Some have chosen to integrate their work inside
the communication or Human Resource department while others have independent and dedicated
to the task at hand. Yet others have opted for an outsourcing approach were they let their regular
financial auditor, like KPMG or PWC or smaller consulting companies like Identitas or CSR
Gender group do their reporting as part of their consulting services.

One would often think that integration would be the best approach that companies can take to
their CSR reporting structure, but if you have no resources this might not be the case. There are
actually some merits to outsourcing or teaming up with a business partner.

For one there is standardization of reporting. I have looked over hundreds of CSR reports of all
types and there seem to be a infinite number of ways that one can write and report on the
subjects within Environment, Social impact and Governance issues. Most of the major consulting
firms will use a standard approach, either invented by them or using one of the majors reporting
frameworks like Global Reporting Initiative (GRI) or one, or more of the standards issued by
ISO. Standardisation enables analysts to compare and evaluate individual companies with each
other across a wide range of indicators.

Secondly there is the subject of expertise and knowledge. Most business does not have CSR as
part of their core business, they produce other types of products or service, which might or might

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not be related to such activities. The point is that most business does not have the capacity to
create a sustainability report, which reflect a relative true image of the company’s behaviour.
When organizations try to create reports for which they have no or very little understanding
about their impact, at most these reports becomes fragments of reality and in worst case they are
more or less conscious efforts at manipulation. So getting the right expertise in place can actual
help the CSR reporting effort even though these resources are not part of the business itself.

Third, there is some merit to the focus on the core business. Some proponents of CSR almost
make one believe that the only reason of business is to contribute to a better world that the
product and organization is secondary to this higher aim. However, any manager or business
professional will tell you that the Reason E’tre for business lay in its product and not it’s
organization or how it conduct itself. This might come as a chock to some but without a clear
product or service the organization will not exist for very long and therefor have no way to
behave either good or bad. This means that if you are managing organizations that produce
technical systems for the medico industry you might not know that much about ethics or how to
access your impact on society or the environment. So the best thing you might do, is actually to
contact somebody who can help you with making this assessment and a external consultant
might be the one you are looking for.

Corporate culture might be in the way of change. We all know that change in organizations does
not come easy so you might want to have somebody who has no connection or previous history
within the company to facilitate this change. Somehow it is just easier for a external consultant to
ask the logistics manager if he receives any kickbacks from the main forwarders working
contracts for the company than it is for the local communication specialist to do the same. The
consultants role and work description is clear in most organizations that they enter and it is
legitimate for them to investigate all the ins and outs of the organizations without there motives
being put into question. So, for some companies it can actually help the process by having
somebody from the outside either as an interim manager or consultant.

I think the lesson is that business “should do what it is good at” and if that includes CSR
reporting, and organizational and cultural change management then they should do that.

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Organizations engaged in CSR activities should have a hard look at their core business and either
establishes a strong connection with their reason for being or ask themselves if it is better
concentrate on something else. If they come to the conclusion that they are not able or willing to
engage in CSR activities, but that it is part of their license to operate they should think about
what is best do a half ass job at it or find a suitable business partner to facilitate the process.

Should FDI be linked directly to engagement in CSR activities?

Companies that engage in foreign direct investments (FDI) in developing countries should at
least some degree have sustainability approach to their business processes or should they?

When we do our every day purchases in stores and shops in our local neighborhood there is a
high possibility that we will be buying wares produced in a developing country. Some of the
thing we buy will be as bought on the open market on the commodities such as a lot of Fruit,
Cacao or Coffee etc. while others are produced, manufactured and exported as part of the same
corporate supply chain. These production facilities are being put in place in order for the parent
company (normally in a developing country) to save costs on procurement, wages and in order to
better control their supply chain (upstream vertical integration).

FDI is characterized as an investment that is made in another country or territories, between a

parent company and its subsidiary. Normally we will look at two types of FDI outward and
inward.

An outward FDI is an investment that is backed by the government against all types of associated
risks. This form of FDI is also closely related to governments export subsidies, partnerships like
strategic philanthropy Risk and different forms of government aid in relation to establishing
corporate presence.

When governments want to attract investments then they can use different forms of economic
factors in order to encourage inward FDIs. These can include low interest loans, tax breaks like
in special low tax areas, grants, subsidies, and the removal of different forms of restrictions and

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limitations. Factors detrimental to the growth of FDIs include necessities of differential
performance and limitations related with ownership patterns.

Link between CSR and FDI

We would like to believe that we are serious about our efforts to develop and create a basis for
sustainable business, but how could we encourage and facilitate such a process. In India there are
concerns that the CSR movement will make life harder for companies trying to export seeing
CSR as a threat to FDI because it puts pressure on some of the areas were developing countries
are actually able to compete such as wages, working environments, labor rights etc.

“Indian authorities think that the ISO standards could be used by developed countries as a way to
decrease trade coming from developing countries. India has appealed that the ISO-26000 should
not be deemed an international standard, guideline or recommendation to follow.” India Briefing
News

This statement is to a large extent in contrast to the popular thinking that CSR is something that
is welcomed in the developing world. The CSR standard is being developed by the International
Standards Organization (ISO) to encourage more corporations to implement socially responsible
practices in among other places their supply chain.

“The whole idea behind the move seems to be to achieve factor price equalization by imposing
minimum wage standards on developing countries,” Biswajit Dhar, director general of Research
and Information System for Developing Countries told the Economic Times.

The question is we morally obligated to implement the same standards as we would at home as
we do abroad?

What if we turn the tables and tell companies that if they want to benefit from the economic
advantages that come with setting up a business in a developing country, they will have to apply
the same sustainability standards which are present in the region they come from. So for example

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if a local garment company sets up a factory in Bangladesh in order to get access to cheap labor
it should as a minimum live up to the same standards as it is under in a local context in order for
them to export garments back to the country of origin. Or if on IT-company sets up operations in
Mumbai, India it would have to employ IT professionals at the same terms that they do it home.

It’s a tempting thought that some of the social dumping issues that are part of the FDI thinking
could actually be tackled through the active utilization of CSR.

Can you be unethical when you made no promises?

According to the definition of ethics you are ethical when you live up to the explicit or implicit
expectations and norms of society. But what if you made no such promise? What if your only
promise to your stakeholders that you would be greedy within the frames of the law and nothing
else, what then?

The propagandist of the CSR movement would claim that the organization would hurt its own
brand and risk losing its ‘license to operate’ but is it worth taking that risk? Much research have
gone into figuring out of there is a business case for CSR and at most the results are ambiguous
pointing in different directions. The issues seem to a large extend unsettled depending on what
parameters that you choose as your benchmark for ‘good performance’.

Looking at the lessons that we are still learning in the wake of the financial crisis it would seem
that CSR is expanding its reign. From being primarily an environmental focused understanding
of the impact of organizations it has developed to encompass social and labour issues with the
help of Global Compact and other UN or international standards. Recently CSR has also
morphed into having a clear stake in governance, risk and compliance (GRC) an area which have
been dominated by accountants, lawyers and risk management consultants.

 If one look at the definitions of CSR that has been argued for over time most of them agree that
it encompass organizations or business and their relationship with their stakeholders in a broader
sense.  And while there is a certain degree of voluntariness included in the activity there are

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strong norms that tries to pressure organizations to explicitly engage in some form of corporate
sustainability endeavour.

But as the original question proposed is it really worth the effort to engage whole heartily in CSR
activities or is are you better off if you keep a low profile and keep to you core activity of
providing the business owners with a reasonably high return on investment. To a large extend
this statement seem to be true as long as you 1) don’t have to many owners, 2) that your brand
value does not constitute the majority of your market capitalization (CAP) and 3) that your
activities are not being target by groups that could get attention by using your company or
industry as leverage.

1)      The fewer owners you have the fewer will have an interest or stake in the strategic
development of the organization. Companies like PWC (formerly PriceWaterhouseCoopers),
Cargil that distributes food and agricultural wares. Also companies like Toys’R’us who is in the
Toys industry but under much less scrutiny than companies like Mattel which I have submitted a
post about.

2)      For some companies the value of their brand does not constitute a major part of its total
value. These companies have either used a branding strategy with diversified sub-brands or are
in a business were the brand is not valued as high. Companies like ArmorGroup who specialize
in security and protection with activities in Iraq and other high risk places. The ArmorGroup can
be seen as an example where the brand value is not essential for its business as it dealt in what
many would consider an unethical enterprise to start with. Having a low brand value makes the
AmorGroup a relative unattractive target for critical stakeholders. Or at least until this was the
case until it was bought by G4S, who do have both a great deal of owners and a relative high
brand value as it deals directly with private customers. The ArmorGroup have actually created a
code of conduct in order to have ethical guidelines for its employees but only did so when the
whole industry came under attack in the wake of the well publicized Blackwater incident in Iraq.
Another company that had relative success within this category have been A.P. Moller-Maersk
that until a month ago did had not disclosed any information about the ethics. The trick is to
know at what point you need to react (maybe based on a thorough risk analysis) and then
implement change with the greatest possible impact on the whole organization.

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Many small or medium size companies (SMEs) find themselves in a situation where it is their
image rather than a brand strategy that creates the basis of a sustainable business model. Often
they will deal directly with their stakeholders and will be in a constant dialogue about their ethics
and morals. For SMEs one can say that the impact of their ethics on brand value is direct and
harsh as customers move their business to other places and can do so with relative ease.

3)      Some industries are just targeted more often by critical stakeholders than others. If you are
in the oil industry, forestry, food production, and medico or biotech industry then the likelihood
that you will attract critical attention higher than if your organization is into pluming, software
design or architecture. So basically, if one understands the reputation risks that are in the
industry an organization will be able to evaluate if it is worth the effort to actively communicate
CSR efforts.

NGOs or other critical stakeholders are not much different from the rest of us and they will try to
pool their resources in areas were they already have a competency. This means that as an
organization one will be able to analyse and investigate what critical stakeholders are within ones
own field of operation and use that information to either target the specific stakeholder. This can
be done either through none-communication or by tendering to the stakeholders needs in the
form of industry specific information, partnerships, lobbying, etc. 

If an organization wants to operate under the ethical radar of critical stakeholders it would seem
that the best response would be to ‘not-communicate’. By this I mean that if you do not have that
many owners (as described in point one), your brand is not tied to much to the value of the
company or at least the risks are not great (point two) and/or if you are in a industry that is not
targeted as being ‘unethical’ it could make sense to just keep quiet.

This does not mean that the company should not prepare response strategies, but rather like a
submarine keep under water for as long as necessary and be ready to strike at moment notice
with a well planned attack.

I will not argue that companies or organization should not be ethical. But the reality is that some
organizations use a disproportional amount of time and funds on ‘would be’ ethical issues that
they properly will never have to respond to. Instead of creating elaborate organizational systems

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for ensuring ethical behaviour they should instead focus on creating a working environment
where sound business ethics is part of the organizational DNA and not put in as a afterthought.

Integrated Market Communication as a CSR

In the introduction of the CSR training that I’m involved in with the CSR gender group I start out
with asking the participants which definition of CSR they subscribe to. The answers normally
vary a great deal depending on the audience but for the majority people would like to be told
what and how CSR is to be formulated. These are the four definitions we present:

 “The Social Responsibility refers to the obligations of businessmen to pursue those policies, to
make those decisions, or to follow those lines of action which are desirable in terms of the
objectives and values of our society.”

“The Social Responsibility of business is to tame the dragon, that is, to turn a social problem into
economic, opportunities and economic benefit, into productive capacity, into human competence,
into well-paid jobs, and into wealth.”

“Corporate Social Responsibility is a concept whereby companies integrate social and

environmental concerns in their business operations and in their interaction with their
stakeholders on a voluntary basis.”

“Responsibility of an organization for the impacts of its decisions and activities on society and
the environment, through transparent and ethical behaviour that contributes to sustainable
development, including health and the welfare of society; takes into account the expectations of
stakeholders; is in compliance with applicable law and consistent with international norms of
behaviour; and is integrated throughout the organization and practiced in its relationships.”

However, I believe that is a misunderstanding to tell people what definition they should
subscribe to. Rather it should be negotiated between the organization and its key stakeholders on
a continues basis. CSR is not a management system and will never become such a system simply
because it is based on the principle that “Any group or individual who can affect or is affected by

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the achievement of the organization’s purpose and objectives”(Freeman, 1984) have a stake in
how the organization develop.

What organizations can do is to become effective in their efforts to identify, categories and
negotiate with the stakeholder on what activities that it should engage in. Such a framework can
be found using a integrated marketing (IMC) approach enabling organizations to communicate
effectively with multiple stakeholders and at the same time indentifying less salient groups
which might have a interest or is affected by the organizations activities.

IMC can be described as a process which involves the management and organization of all
stakeholders in the analysis, planning, implementation and control of all marketing
communication contacts, media, messages and promotional tools focused at selected target
audiences in such a way as to derive the greatest enhancement and coherence of marketing
communication effort in achieving predetermined product and marketing communication
objectives.

An IMC approach will in my mind be the most effective framework a given organization can
adopt if it wants to be regarded as social responsible player and keep some influence in relation
to its identity, culture and image.

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Accountability in mist of turmoil

The directors of AccountAbility and the practical caretakers of the AA1000 standard have
suffered a major setback. In their efforts to turn the previous “open source” standard into a basis
for a sustainable business model they are experiencing a crisis of identity.

On the 11th the whole standards board (SB) resigned in an open letter to the directors of the
organization. You can find the letter here.

The event that is described shows a couple of issues that I think one can learn from.

 That culture matters. The AA was established as a multi-stakeholder run organization

with the aim to:

o Enable open, fair and effective approaches to stakeholder engagement;

o Develop and recognise responsible competitiveness in companies, sectors,

countries and regions;

o Create effective collaborative governance strategies for partnerships and

multilateral organizations that are delivering innovation and value, and

o Set and influence sustainability standards.    

None of which it has been able to achieve with any great success creating a crisis of the purpose
of the organization was really in sync with the stakeholders it so badly wanted to communicate
with. When the AA became professionalised in order to “turn the ship” around the old culture of
the NGO had to be put aside this created a identity crisis from which the organization have been
unable to recover.

 When creating change you also need to change the artefacts. The AA1000 was the
artefact of the old organization it meant something to them that somehow was sacred and
untouchable. When the professional management took this icon of what was “right”
about CSR reporting they practically tried to sell the cultural soul of all the people that
was involved. This cultural sell-out created tension within AA which it was unable to

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control and resulted in first that the Governing counsel in November 2010 resigned and
finally the SB.

I do not offer an opinion (even though I have one) on if it is right or wrong for AccountAbility to
change their reison d’etre. I the case of this organization I find it interesting that that change is a
difficult thing even for those that wanted change is their main purpose.

The social responsibility movement is killing of the SMV

Small and medium size companies or SMVs have been forgotten in our increased efforts to
pressure companies to become more responsible. A few days ago I discussed with a local
carpenter I know about how social responsibility is changing the way we are doing business and
not least how business relates to society. He was not unreceptive to the ideas and recognized that
business do potentially have a great impact on both social and economic factors. However, he
did have some questions that I found difficult to answer directly through the mainstream CSR
thinking.

1. As a small business he was unable to meet the new criteria that the state and
municipalities put forward in order to get contacts. In “our” strive to force business to
become more responsible we are at the same time killing of the small and medium size
companies ability to bid for the most lucrative contracts. In Denmark there is about
305’000 companies (yes, it’s true. Out of a population of 5,5 million) of these are 1100 or
0,36% required by law to have a CSR policy. All though this is a very small percentage
of the total number of businesses are the requirements for SMVs to document their
ethical behavior in a wide range of areas on the increase. For example, if you want to be
shortlisted to bid on government contract through the state purchasing central (SKI) you
will have to document your performance in a wide of areas. In the final evaluation 10-
20% weight or points will be given to the environmental impact that the business can
document to have. Most small business do not have a elaborate environmental
management system that will tell them what their impact is so for most small companies
this area will be left blank or inadequate filled out. This has the effect that they will not

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be given points for the questions, or as SKI puts it:“If the questions are not answered or
inadequately answered, and the requested documentation is not produced, the contracting
authorities are entitled – and may be obliged – to disregard the tender in question.”

2. If you want to bid on big contracts anywhere, you need to have excellent computer skills.
The time where big companies took up the phonebook and called the local electrician is
over. Now local craftsmen will have to make bids, be short listed and document behavior
on a wide range of areas before they let you in the door. For many small businesses this is
just too much work so most contracts will go to medium or big size contractors. One of
the reasons why they became craftsmen in the first place was because they did not want
to sit in an office and fill out endless forms, but now they are forced to if they want to
have any business at all.

3. The majority of SMV actually has a great social impact in their local community. In the
old days if one of the youngsters came into trouble you took him to the mechanic or
blacksmith around the corner and asked if they could help out with the youngsters
“surplus” energy. This is still the case today but it’s not recognized as CSR actually it is
not given any merit at all. When one look at the amount of training places there is in big
companies compared to SMVs it is mind bobbling. Most big companies just don’t take
trouble youth at all they rather have them out of the local technical school so that their
costs for education can be deducted on their tax bill.

4. Most ethnic minorities have problems getting into the mainstream jobs so for many first
and second generation immigrants the only option is to create their own business. These
businesses support and create the foundation for future citizens that will bring new ideas
and innovation to the societies that they are part of. The impact of immigration cannot be
underestimated just look at the US, Australia and New Zeeland that are build upon
immigrants wanting and striving to achieve a better future for themselves and their
families.      

5. Small business presents a opportunity for women that would otherwise be out of the job
market to get a foothold. Many new businesses are within e-business is started by women
as it they can be managed from the home and in most cases does not require a lot of

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warehouse space (at least in the initial phase). If women choose to take full advantage of
the opportunity for parental leave there is a relative high likelihood that they will lose
their connection with their old place of work and in some cases they want to change their
working patterns. Small business gives women a opportunity to be their own boss,
planning and managing their own time. These are opportunities that big business does not
offer, even with the best of work/life balance plans out there. 

6. Investment in small business has shown to have a significant local impact. Micro
investments like the once done by Grameen bank have shown that investing/lending in
“bottom of the pyramid” business ventures can have a very good return. Actually it has
shown to be better than lending money to mainstream businesses because of the
diversification of risk and that investments are done with survival in mind and not fluffy
business ideas and fancy spreadsheets. Today one can as a private investor put money in
microloans through websites like MyC4 and Kiva. 

With this in mind do big companies still have a obligation towards society? Of cause they do but
in our euphoria to create a better world we should not forget that there are others out there that
really do a difference and whose impact is many times bigger in total than all the biggest
multinationals combined. It is like the question of what weights the most all the elephants of the
world or all the ants? And the answer is, as you might know, the ants. They might be small but
their sheer numbers combined make them weigh so much that they outperform all the elephants
combined.

Capitalism and CSR

I just read an interesting paper by Wayne Visser. He criticizes what he believes is the failure of
CSR, or what he names as CSR 1.0 as it current is being practiced. He makes the comparison
between CSR and the developments within the internet moving from Web 1.0 to Web 2.0. He
believes that there should be five guiding principles for a new form of CSR namely: Creativity
(Sustainable Business innovation), Scalability (The ability to transfer individual experience into

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a systematic approach), Responsiveness (meeting the needs of the community), Glocality (a
rewrite of being global but acting local) and Circularity (A cradle to cradle approach)

His article looks into some of the key areas of CSR and comes up with a DNA model for
responsible business. His key point is that companies of the future that practices CSR, or CSR
2.0 as he put it, will have to include four basic “codes” into all aspects of their business. These
building blocks are Value Creation, Good Governance, Societal Contribution and Environmental
Integrity.

I must admit I like the approach that Visser present. Especially one point, which he includes and
I think that many CSR professionals tend to miss in their argumentation, is that companies have
to make a profit in order to be able to contribute the society. While Visser thinks that “our
modern capitalist system is faulty at its core” and points out that it is basically a limitless system
dedicated to endless consumption of our global resources. He argues that Adam Smith and his
“invisible hand” were wrong and that the resource consumption of capitalism should somehow
be controlled. His basic argument is that nothing lasts forever and if business continues to exploit
the resources of the earth we will all suffer.

As a firm believer in both CSR and in Capitalism (faulty as they both seem to be) I have to say a
few words on behalf of our current economic system.

First, capitalism is not the perfect system assuming that one’s goal is that we should have a
perfect harmonious world. Actually it has disharmony as one of its central points as markets
strive in the vortex between demand from those who want and the ability of business to produce
in order to meet that want.

When business operates it will always try to produce at the lowest cost possible at the right
quality in a timely manner. This is because we as consumers wants to buy quality at the cheapest
price available and that the owners wants as much out of their investment as possible. In a
globalised world we are able to produce our products in one end of the world and sell on the
local market in another, at a fraction of the price it would take produce the same thing locally.

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In theory all should be happy, we as consumers (because we can afford the product), workers in
the developing world (because they have jobs), Society (because we all pay tax and contribute to
local community) and the environment (as we disperse a possible impact).

However, we are not as happy as we could be. Because consumers lose their jobs when their
place of work is moved, as the working conditions in the developing world is far from what we
have come to expect, as corruption and tax schemes tend to eat up all the potential benefits that
having big business do investments should come with and because there is no effective local
government to enforce en environment standards. And of cause because there are evil people
who are willing to make others suffer in-order to make a buck.

But as flawed as it might be it seems to be the only system that we as humans are able to make
work.

Secondly, Because of these tensions in the capitalist system and the access to information that
have become available through the web about the impact of global business we have invented
CSR. Or rather business has invented CSR, as it is not a system that governments have
promoted, actually quite to the contrary actually. Think of strategic philanthropy and how giving
company products to schoolchildren. Think about the controversy this raised among the public.
So, why should capitalist endorse CSR? Well they already do because they want what every
business desire namely growth, prosperity and market share, and in order to do so they need to
manage risk, reduces costs, be ethical, retain and attract employees, manage their stakeholder
relationships, have a positive brand, innovate and learn, and not least understand their business
even better than it does today.

In this context is CSR a tool that business can use to be ahead in the future. Visser claims that
business thinks short term, but I do not think that this is necessarily true. What I do think is that
shareholders (e.g. us, through pension funds, bank connections, unions etc.) think short term and
“we” pressure companies to do the same.

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Third, should we leave the market alone? No of cause not, we need to manage capitalism and we
need to have some form of business control and transparency. There are plenty examples that
evil and corrupt people can do real harm to the world. Just think of Enron, Lehman brothers,
Arthur Andersen, etc. and one can easily se that no control is REALLY a bad thing. So systems
of control need to be put in place so that the biggest impacts of global capitalism can be
mediated. These systems are being formulated as hyper norms or institutionalized norms through
organizations like the OECD, UN, EU etc. where politicians and professionals alike find out and
not least learn how capitalism can be gently pushed in the right direction for all of us.

One last note for you to think about as one put more and more on the shoulders of companies
around the world. We shouldn’t leave it to business to solve the problems that governments can’t
seem to agree to solve themselves. COP 15 and for that matter COP16 showed that politicians
are unable and to a large extend unwilling to solve the issues that we are all becoming victims of.

CSR and Development cooperation

just came back from a two day seminar in Sweden on CSR in difficult markets. It was the first
time that we ran this specialized course and even though we have significant experience within
our respective fields we were a bit nervous if the outcome would be satisfactory. The CSR
gender groups consist of people from the business world and professionals from the development
community. Two groups under normal circumstances would not meet in some conditions are
even perceived as having opposing goals.

The diverse group has on average over 15 years of experience within their field, so there is no
doubt that we could do the job within our professional fields, but were we also able to merge the
two worlds? We have been working with the material for about one month and had come up with
a basic approach that would enable us and the participants to travel the many areas of contact
between business and development operations. We opted for a risk management approach on the
business side and a contextual analysis and stakeholder engagement on the development.

In essence we went through the following general areas:

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1. Brief history and background on CSR

2. Development and difficult markets (Development are never active in anything else than
what would be perceived as a difficult context)

3. A structured approaching risk management as in addressing Social Risk factors

4. Using SWOT to address stakeholder engagement issues

5. Strategic approaches and lessons learned from working in difficult markets

We wanted to add some more on communication strategies when risks becomes issues that
organizations have to deal with but we did not have time for this extra feature. In the courses to
come we will however expand the course to include a half day more in order to include this very
important feature. We also wanted to add a gender perspective to the difficult market context as
it is one of the most salient issues that when having to deal with strategic problem solving in
these areas.

I think the most important lessons learned from the course were that the development and
business communities have a great deal to learn from each other when it comes to working in
difficult contexts. First of all because the experience from the professionals in development can
be directly used by business in order to produce countermeasures and control mechanisms that
can reduce the risks that they are confronted with. Second, business has an impact on developing
and emerging markets that development aid will never be able to match. The effect of foreign
direct investments (FDI) in these areas imperative if some of these countries are over to
overcome the social and structural challenges that they are faced with. Third, companies prefer
risk free or low risk areas but through a structural approach they will be able to grown new
business ventures were they in many instances will be first movers.

The potential for business-development cooperation is huge and there is no doubt that in the
future we will see more public-private partnerships. But even beyond the just working together
with in framework CSR there are new ideas to be explored that utilizes the business sense of the
companies and the unique inside knowledge that development can bring to the table.

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Can you be certified responsible?

The new standard from ISO 26000 is out and alive. I have written some words about the system
before which are the biggest attempt to create one system for all the CR activities that an
organization might engage in. I have some critical remarks on what I see as an attempt to micro
manage norms and I believe is in essence a very big compromise. With over 100 pages of
standard description it would make even the most committed CR professional dizzy.

There is certainly a need for some standardization within CR reporting no doubt. Just look at the
top ten companies in your region and you will with guarantee find ten different ways of
reporting. Even the ones using Global Reporting Initiative as a reporting platform have different
ways of interpreting the standard even though it might seem very obvious at first.

What I find disturbing is that some organizations are certifying ISO 26000 for companies. So
what the problem you might ask? Well if one get certified the auditor signs that a given
organizations is living up certain predefined standards and have been audited in doing so. In a
CR context this would mean that you are living up to the norms of your stakeholders. Basically
CR can be defined as Engaging, Understanding and Complying with the norms of stakeholders
and society at large. So with this definition an organization would be in compliance for about
one second or less, which would be absurd.

As you might have guessed I do not believe that CR should be certifiable. Companies like Dansk
Standard (DS) that claim that they can guide, audit and certify other companies CR efforts are in
my eyes not creditable. A company might need outside assistance in their effort to engage with
their stakeholders more effectively but certification is not the way to do that. There are several
very good consulting companies on the market and they will be able to guide a CR process from
start to end but a very few will put their name on the well and certify the company as being
social responsible even if it was only a one year certification.

Any organization that I would come across with an DS26000 (the local certifiable version of
ISO26000) plank on the wall would in my view be eligible for in-depth scrutiny by all the
critical NGO’s and CSO’s that would claim to have a stake in its activities. I’m sure that

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companies that get that kind of certification have totally missed the point of what social
responsibility means and what it entails.

There is a presentation of the DS standard in the start of next month maybe they will be able to
convince me that I’m all wrong and of cause there is no issues related to being certifaiable
good… I will keep you posted.

Conclusion

Smart partnering is good business. Our readers’ experiences and ideas confirm that momentum is
building toward a time when CSR will be absorbed into core strategy and business activities
rather than treated as an orphan in need of a special label. With your help, this momentum will
build. Share your experiences, shape your activity portfolios, develop your balance sheets and
benefits matrices, and challenge the business community to keep changing mind-sets for the
better.

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Appendix
1. http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-
domaines/other-autre/csr-rse.aspx?lang=eng

2. http://www.investopedia.com/terms/c/corp-social-responsibility.asp

3. https://en.wikipedia.org/wiki/Social_responsibility

4. https://en.wikipedia.org/w/index.php?title=Corporate_Social_Responsibility&redirect=no

5. http://sriportfolio.com/tag/corporate-social-responsibility/

6. http://mvonederland.nl/dossier/international-csr-portfolio

7. https://www.researchgate.net/publication/270413833_Corporate_Social_Responsibility_
Risk_and_Return_in_Portfolio_Management

8. http://www.ardian-investment.com/en/corporate-social-responsibility

9. https://www.kbmanage.com/concept/corporate-social-responsibility

10. http://www.mckinsey.com/insights/corporate_social_responsibility/making_the_most_of
_corporate_social_responsibility

11. http://www.investopedia.com/terms/c/corp-social-responsibility.asp

12. https://en.wikipedia.org/wiki/Corporate_social_responsibility

13. http://www.mallenbaker.net/csr/definition.php

14. http://www.businessnewsdaily.com/4679-corporate-social-responsibility.html

15. http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-
domaines/other-autre/csr-rse.aspx?lang=eng

16. http://www.givelife.in/work/csr-portfolio-management/

17. https://www.researchgate.net/publication/276309538_Organizational_CSR_Portfolio

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18. http://www.csreurope.org/solvay-sustainable-portfolio-management-
spm#.VomPj7Z94dU

19. http://www.reichlundpartner.com/en/portfolio/csr

20. http://www.toppanvite.com/index.php/en/compliance-reporting/csr-portfolio

21. http://sriportfolio.com/tag/corporate-social-responsibility/

22. http://focuscsr.sasse.se/?post_type=portfolio

23. http://mvonederland.nl/dossier/international-csr-portfolio

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