Responsible Corporations vs. Corporate Responsibility

whats-the-differenceIt’s a small difference linguistically, but substantively, a serious division exists between the terms ‘responsible corporations’ and ‘corporate responsibility’.

On July 9, Paul Tsaparis wrote an engaging piece for the Globe and Mail that spoke to the importance of 21st Century businesses embracing the pursuit of triple-bottom-line (people, planet, profit [PPP]) success. I believe Mr. Tsaparis is spot-on in his assessment of the value in this more holistic, long-view approach to our market economy. There are two points, however, that I would like Paul to consider more fully:

#1: It matters which comes first: the ‘responsibility’ or the ‘corporation’. 

#2: Good intentions/good marketing are not good enough.

Corporate Social Responsibility (CSR) has been on the scene within most major organizations for the better part of two decades now. Hell, even Enron had a CSR report to deliver to their directors (often to great praise and multiple awards) on an annual basis. The problem with traditional CSR is that it is compartmentalized ethicality—Team A exists to make all the money, while Team B signs on to the right compacts and develops the right charitable relationships that allow for the atonement of the sins that ‘A’ may have had to commit in their pursuit of the “real business”.

Even the mechanics of the term “corporate responsibility” clearly define where a venture’s priorities lie. In this two-word term, the ‘corporation’ is placed first. And then, tacked on at the end, is the ‘responsibility’ bit. Conversely, for responsible corporations—the ‘responsible’ is the primary identifier.

Tsaparis uses the terms interchangeably:

“I, too, am a believer in responsible capitalism, not only because it is the right thing to do, but because I know that the adoption of corporate social responsibility practices is the only road back to a sustainable…recovery”

I fear that a small difference in syntax/semantics will, ultimately, result in a significant difference/disconnect in the action we see play out in real-world/real-time business.

When the ‘responsibility’ piece is front-and-centre, it becomes the lens through which all other decisions are made. As Whole Foods CEO & co-author of Conscious Capitalism John Mackey has said, “Eventually, a conscious way of being has to become part of the DNA of the company” [emphasis added]. The DNA of a company. This is the language of deep integration. DNA informs everything about an organism (or organization) and it cannot be compartmentalized into ‘business’ to the left and ‘ethics’ to the right.

When business insiders insist that CSR is becoming the new standard in business (because frankly, it is the obvious profitable path forward), I think we risk under-appreciating the tension in the PPP economic model. Caring is one thing. But institutionalizing such care and operationalizing the impact you want to see in the world is a whole challenge in and of itself.

So the question, then, is how do we measure the ratio of spin to substance?

To put all of my cards on the table, I should state that I work in Toronto at the MaRS Centre For Impact Investing—where our daily mandate is to help mobilize private capital for public good. We harness the fantastic forces of the market economy and help them bend toward catalytic social impact. Within this mandate, I work on B Corp (Benefit Corporation) Certifications. With this third-party assessment, businesses committed to the triple bottom line of people/planet/profit finally have an objective measuring stick—or as B Corp co-founder Jay Cohen Gilbert says, “B Corp Certification helps differentiate good companies from good marketing”.

Rather than being satisfied with an annual update to their board of directors on corporate social responsibility practices, Certified B Corps are committed to the idea of holistic success that takes into account community investment, environmental impact and workplace experience. They are committed to the big idea—and they’re willing to have a third-party measure their effort and publish their results for all the world to see.

Through the certification process, vague generalities like “going green” and “community involvement” are given a standard of measure that can turn specific actions and efforts on the part of a business into a score that allows the public at large to then see quantifiable evidence of good business done well.

Like Paul Tsaparis, I fully believe in the profit potential of responsible corporations that pursue a triple-bottom-line approach. But a good heart or a great marketing department will not be enough to lead us to a different kind of capitalism in the coming century. We’ll also need metrics.

So as “executives, employees, shareholders, pensioners, voters, taxpayers and governments”, let’s demand quantifiable measures like B Corp Certification and then hire, apply, trade, invest, advocate and buy accordingly.

This article was originally published on SocialFinance.ca
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Aaron Emery can be found working at the MaRS Centre for Impact Investing, but comes from a varied background in political campaign work as well as consulting on non-profit strategy and corporate social responsibility. Through other stints in a brewery, drama school, military base, and an active hurricane-recovery zone—the one consistency running through his work has been the call to be a “catalytic storyteller”.  You can follow Aaron on twitter by clicking here.

  • PeterBurgess

    Aaron Emery asks some pretty basic and important questions. I was somewhat shocked that it is about 20 years since CSR became somewhat popular, and I find that very bothering since the state of society and the global economy has not made significant progress in that time in spite great progress in technology, productivity and profits. In my view, CSR is not much more than a tiny band-aid on top of a system that is seriously dysfunctional. For several generations, business schools have taught managers how to operate a business to achieve maximum profit, but done little or nothing to train people on all the issues of people, place and planet. The Triple Bottom Line (TBL) talks about people, planet and profit, but TBL works through the organization with people and planet not having any actionable status. This is why I argue for impact on place to be as important as profit for organization. People and planet are both part of place. An organization may be either positive or negative for a place … and this should be taken into account.

    Peter Burgess TrueValueMetrics

    • Hi Peter, thanks for sharing your thoughts. You’re spot on with your analogy of the “tiny band aid on top of a broken system that is completely dysfunctional”. The Capitalism 2.0 Paper (CAP2) is coming out in September – we hope to shed more light on this issue.
      http://tsss.ca/the-capitalism-2-0-project/

      • PeterBurgess

        Thank you for alerting me to the upcoming paper on Capitalism 2.0. I look forward to learning more about the CAP2 thinking.

        One of the issues I want to see addressed is the whole area of metrics, not only how we measure all the things that are important (like quality of life, for example) but how we make the data feeds actually serve to create the action that is needed.

        There is a huge amount of data that flows in and around the corporate organization (not to mention national security and the military), and quite a lot of data that gets aggregated for national level economic statistics. By comparison there is a tiny pool of data about people and planet. The Triple Bottom Line (TBL) initiative is about people, planet and profit but the organization is the only reporting entity that can make things actionable, and for organizations mostly it is profit that matters.

        The TrueValueMetrics 4P thinking has metrics about people, place, planet and profit where profit is in the interest of the organization, and impact on people and planet can be usefully reported for a place. It is then possible to track the state, progress and performance of a place in just the same way that organizations track their profit.

        As far as I can tell there is virtually nothing that enables people (and organizations) who want to do the right things to (a) know what to do; and (b) know what impact it is having at an interesting level. Place seems to me to be the way to solve this problem.

        The people that are working to mobilize and monetize all the personal information in the social network ecosystem are putting together technology that could relatively easily be modified to link things like product value chains, with organizations, with places, with aggregated planet impact, with people behavior, with organization behavior in a massive big data OLAP environment. I cannot do this stuff, but I am aware that it can be done and is already being done for some of the socially unproductive CAP1 agendas!

        Best

        Peter Burgess TrueValueMetrics

        • Andy Savitz

          Peter, Brad and Aaron

          Thanks for this interesting discussion. My new book, Talent Transformation and the Triple Bottom Line offers some ideas for turning sustainability into action. I think metrics are important, but not as much as organizational culture, which relates to the employees in your company. They work on each other (culture and people) and those companies that have figured out how to align their sustainability values with those of their employees have seen engagement jump and business results follow. Starbucks is a good example, so is Wegmans and other companies that put employees first.

          Andy

          • PeterBurgess

            Andy … this should not surprise you, but I really do not agree. The choice between culture and people and metrics is a non-choice. Metrics simply enables the impact of different real things to be assessed in a meaningful objective way. Objective metrics do not start off with the idea that anything is good or bad, merely that they exist and the results are thus and the value consumed is thus. Draw your own conclusions.

            With respect to Starbucks, within Starbucks there is a people culture that is quite impressive, But Starbucks uses coffee which is part of an industry that is more unfair than fair. The fair trade in coffee is a gimmick without much substance (based on work I have done at the farmer level). Furthermore Starbucks is comfortable with aggressive tax avoidance, another issue for which I have little enthusiasm.

            I agree culture and people are important factors … but metrics are needed so that people do not game the system so that they look good without being deeply good.

            Peter Burgess TreeValueMetrics

  • Joyce Placito

    great analysis. ethical and legal departments do not mean a good corporate or world citizen