RSS Feeds:You must remember this.
By Steven MacGregor
Q: What do you call it when the second richest man in the world gives 85% of his personal fortune to the richest man in the world?
A: A start.
Responsibility is defined in terms of accountability and blame, but we tend to shy away from the former and indulge in the latter--not only in a trivial, everyday basis, but also in reference to the greater well-being of ourselves and our natural surroundings. Since each of us is tied into the ebb and flow of production and consumption, we need to be accountable for our individual actions. (The recent onslaught of environmental and ethical awareness stems from our face-to-face confrontation with the unsavory repercussions of our disregard, to date, for global wellness issues.) In the macro, society's general attitude must orient itself towards an all-encompassing idea of responsibility. And here we can exploit the emerging force of businesses and industries that implement methods of Corporate Social Responsibility (CSR).
"In reality, notions of ecological responsibility and business responsibility are similar. Both reject waste and profligacy; both embrace the notion of responsible stewardship and investment of assets in order to reap greater returns in the long term."
The ABC's of CSR
CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large.
--World Business Council for Sustainable Development (WBCSD)
The rapidly growing field of CSR was initially a tactic used by major corporations aiming to pacify consumers' ethical concerns, with origins in the anti-corporate and anti-globalization protests of the late 1990s. Today, CSR is epitomized as the voluntary ethical behavior of a company towards society--including shareholders and stakeholders--"holding" human and employee rights, environmental protection, community involvement, and supplier relations as core values. CSR does not embody a single issue. It doesn't concern green issues, workers, or communities exclusively, as these are all key issues which, working together, may in time form the solution we're looking for--a solution that the world badly needs.
The core principles of CSR are not new. Even when the responsibility of industry was viewed as being exclusively economic in nature--from at least the start of the industrial revolution--there were some notable displays of philanthropy, especially in the US. Publications on social responsibility date back to the 1930s, while Milton Friedmans oft-quoted article, 'The Social Responsibility of Business is to Increase its Profits' dates from 1970. IESE Business School in Barcelona, pioneers in the field, published 'The Social Responsibilities of Business' in 1980. Professor of Business Ethics at IESE, Joan Fontrodona, states that "The heightened awareness of social responsibility in recent years has been borne out of business scandals and crisis, but it is here to stay. Much work lies ahead and the process is slow, but there are many reasons to be optimistic." Much of that optimism, he states, is based on a new social consciousness, and the development of tools to support practice and implementation.
We must take advantage of this current state of heightened awareness by exploiting the business scandals and protests of the late 90s and early 00s--in a way that was perhaps not the case from similar protests in the 60s. What has changed? Fontrodona believes that "an increased social conscience is evident, with the public given greater priority, as the effects of globalization take hold. In addition, technology has led to a greater democratization of information, meaning that dissident voices can make themselves heard."
Many related terms exist: Corporate Social Responsibility, social responsibility in business, corporate responsibility, corporate citizenship, sustainability and corporate governance. The US still prefers to talk about business ethics, with the CSR term being more common in Europe. Many in the US still identify the latter term as an overtly anti-business practice imposed by those outside the system, while Europeans seem not to receive the former well, believing it to convey a moralizing tone at odds with the corporate view. One way of speeding up the process, therefore, must be to move beyond words and into action.
The reasons for companies becoming interested in social responsibility are diverse. Risk protection, market positioning, recruitment, political-social relationships--each displaying an inverse relationship between immediate economic impact and degree of commitment. For example, many companies may only engage in short-term socially responsible practice to guard against risks, reaping the short-term economic benefits, say, in an environmentally-pressured project. Yet we must not criticize such approaches, but argue that the real value is in long-term implementation tied to core value creation in the enterprise. Doing something rather than nothing should be applauded and encouraged.
The reasons for companies becoming interested in social responsibility are diverse. Risk protection, market positioning, recruitment, political-social relationships--each displaying an inverse relationship between immediate economic impact and degree of commitment.
CSR in Motion
It's tempting to sit back and wait for major corporations to shape up and lead the way. But though major CSR initiatives appear to emanate from big businesses only, we should reduce our reliance on them for mainstreaming responsibility. (Again, CSR in this context is usually manifested as a defensive response, handled by public relations.) Ideally, responsibility should be exhibited as a value-adding lever tied to the core success of an enterprise, not as a departmentalized pacification or defense tool. As stated by Ian Davis, Worldwide Managing Director at McKinsey, "CSR has the potential to shape the strategic context for companies and can exploit longer-term opportunities and issues, although we need a fresh approach."
In addition, governments go to great lengths to promote entrepreneurship and small business development, but that enthusiasm hasn't yet been applied to CSR as a key player in that same promotion. So the increasing adoption of responsibility must be driven by the small business force; passing the responsibility hot-potato is no longer an option. Economic wealth must be tied to a wider notion of health. And the potential of SMEs (Small- and Medium-sized Enterprises) is argued by their numbers: 93% of all European enterprises have less than 10 people; two-thirds of all jobs are in small business--which continue to grow, in contrast to large enterprises. The numbers are lower, yet still significant, on the other side of the pond: The U.S. has 49% of its workforce employed in small business, (which produced 13 times more U.S. patents per employee than large firms in 2003).
The emerging giants of the world economy are no less important, and arguably more so. Although heavily reliant on a top-down approach with large amounts of Foreign Direct Investment, Chinese SMEs produce 65% of patents and 80% of new products. With the rapidly developing infrastructures in the billion-people economies of China and India, we need to ensure that they are being built bottom-up in the right way. We may not get another chance. Designers don't just design products, and we need to provide responsible resource consumption solutions on the system level.
At what cost?
Costs and value are a major concern in asking small businesses to make a difference. For example, most small companies who have a responsibility-based agenda--such as organic produce, for example--charge a premium for their products. Yet responsibility need not be analogous to sacrifice, as a holistic approach to responsibility can yield unmatchable value in the long run. The current drivers of responsibility--the major conglomerates--are often characterised by responsibility-conflicting values--such as market domination, cost reduction, and standardization--which also inhibit ethical progress. Active participation of larger enterprises is necessary, of course, but our growing abilities in creative business strategy offer new opportunities for small business to realize efficiency through collaboration. For instance, powerful networks of SMEs can work together to achieve scale efficiencies, while simultaneously practicing responsibility. Notions of cost may be tied to current methods for implementation. The European Observatory of SMEs states that most small company implementation of CSR is done on an occasional basis, and not tied to business strategy. And of course, a big step in this approach is making CSR a major part of the core decision-making process at senior levels.
Value can certainly be realized with the right approach. Bill Joy, co-founder of Sun Microsystems, believes that "there is an enormous amount of business potential in green technologies, including fuel cells, advanced battery technology and biotechnology." Hopefully, responsibility will soon loosen its association to notions of sacrifice. IBM's Global Innovation Outlook 2.0, a worldwide conversation between business leaders, highlights that discussions about the environment don't usually correlate with potential business interests. So they emphasize the value message: "In reality, notions of ecological responsibility and business responsibility are similar. Both reject waste and profligacy; both embrace the notion of responsible stewardship and investment of assets in order to reap greater returns in the long term."
With the rapidly developing infrastructures in the billion-people economies of China and India, we need to ensure that they are being built bottom-up in the right way. We may not get another chance.
On responsibility
Building awareness is critical, and can be effective if well-distributed. In the '80's, quality slogans played a huge role in the implementation of quality control standards. Phrases like 'Zero defects' and 'Right the first time' were everywhere, encouraging workers to incorporate quality in their every action. Knowledge guru Tom Davenport stated that "the great success of the quality movement can be measured in the fact that it became invisible." Not hearing about quality doesn't mean that we don't see or experience it--it simply became second nature. Responsibility can easily follow the same path, becoming second nature in individual, business, industry, and government practices. Responsibility slogans, anyone? Many products have health messages. Why don't we extend that logic beyond personal health...to world health?
Awareness of our everyday actions as consumers in the realm of supply and demand is also a vital factor. Would rapid-cycle products sell so prolifically if everyone knew that 20-50 million tons of electronic and electrical waste releases an astounding amount of toxins into the ecosystem every year? Do we really need that hot new cell phone? (Japan alone will have discarded 610 million of them by the year 2010.)
A powerful dialogue among all levels of those involved in production and consumption networks is crucial. Governments, industries, institutions and communities need to become a unified force. Several government policies have been successful, including the European Union 2003 directives on Electrical and Electronic waste, which resulted in the development of innovative products and processes that reduce undesirable outcomes--an appealing feature to ecologically-aware consumers. Francoise Devilliers of the Directorate General for Enterprise and Industry points to the European Commisions strategy for making Europe a 'pole of excellence in CSR': "the key point is to make this a voluntary process. We will not implement regulatory inititiatives, rather aim to create a political umbrella for small and medium sized enterpises. To this end we are creating a European Alliance for CSR--it is not a legal instrument to be signed by enterprises, but rather a vehicle for mobilising the resources and capacities of European enterpises and their stakeholders in the interests of sustainable development, economic growth and job creation."
And there are related issues in need of action. Reforming standards and best practices can reduce costs, as well as waste. Why do US steel companies use use 20 tons of water to make 1 ton of steel, while Korean steel companies use just 3 to 4 tons? Viewing waste as food, could we send the water employed to cool steel to breweries for their fermentation process (suggested in the IBM GIO)? Smarter solutions are required. Improvements in working conditions, refuse management and community involvement are just a few ways we can use a global value system as our reference point, as opposed to income-driven visions that pay no heed to consequence.
Taking action
The necessary infrastructure to achieve critical mass of responsibility is clearly emerging. Commenting on the opening of the new centre for corporate responsibility at Cranfield University in the UK, Professor Michael Osbaldeston notes that responsibility is "crucial to the success of business" and "increasingly it is the case that business cannot be indifferent to how it creates value." And education and training should produce the next generation of global leaders who will integrate social responsibility in their day-to-day actions. The recently completed FORCREST project, led by the Technical University of Catalonia in Barcelona, developed a training tool for small business and entrepreneurs, with already 250 (many with no previous knowledge of the issues) having completed the course. Project leader Maria Clara Torrens states that "FORCREST has been an excellent means of introducing the theme of responsible entrepreneurship to the participants, with a highly effective knowledge diffusion to society in general having been evident." Programs like these are just the start, and tool development is required on all levels. Professor Fontrodona adds "If social responsibility is to become a living entity, we need to develop management tools that will allow businesses to measure, evaluate, monitor and communicate their actions in a relevant way."
Getting there will not be easy. As awareness spreads, benefits will become visible, bringing us closer to a unified global practice in responsilibity. We are all leaders in some way, and our decisions and actions are intrinsically linked to those of our peers and our environment. A powerful collective consciousness can transform our humblest efforts into significant impacts, as awareness alone achieves nothing without action.
Based in Barcelona, Steven MacGregor teaches and consults in the areas of design, technology and business innovation. He is responsible for the European Union RESPONSE (Responsible and Sustainable Innovation) Project--a 15 month initiative which aims to "mainstream CSR practices in European SMEs". The project aims to show the link between innovation and responsible practice, thereby making the business case for responsibility. Demonstrating that responsibility need not imply extra costs, and using existing responsible design practice as a basis for creating a responsible innovation model are core themes. Comments are welcomed. Contact him at steven-at-spmacg.net. Steven's last article for Core77 was Reinventing the Wheel: Pushing the limits in high performance bike design.
