CSR is dead – it’s over! So declared Peter Bakker – President of the World Business Council for Sustainable Development – at the recent Sustainability Science Congress in Copenhagen.
Bakker’s key argument is that leading companies are already going way beyond CSR and are integrating sustainability within everything they do, in recognition that business cannot succeed, if society fails. He urges us to innovate – to align with facts, to redesign what we mean by good performance, and to get inspired by new definitions of success.
Carbon pricing is inevitable…learn to love it.
In concrete terms, Bakker calls for a revolution in capitalism – led by carbon pricing: and he means a real price of 100 dollars per tonne and rising – to reflect the true cost to people, society and planet, and to drive real business innovation. “Carbon pricing is inevitable,” Bakker asserts, “Learn to love it.”
Bakker’s provocative message is all the more compelling when we remember that he represents 200 of the largest corporations in the world. The scale of influence is impressive, but the real point here is that these organisations rank amongst the chief beneficiaries of the old economy and, as such, they might almost be excused for working to preserve the status quo. Bakker is clearly not content to sit back, or to hide behind glossy reports. He means business.
But is he right; is CSR actually over?
SCRATCHING THE SURFACE?
Reports on the early demise of CSR may yet prove to be somewhat exaggerated. There is, of course, much CSR thinking and practice still going on – with more and more companies reporting on CSR performance, in tandem with a burgeoning number of conferences, events and media traffic.
While there is more noise than ever, there is a huge question mark over how much of this translates into meaningful action: what is the impact of CSR – and the extent and depth of real change for the better?
The latest surveys reveal little meaningful progress across a range of metrics in business. And, keeping a weather eye on the horizon, global greenhouse gas emissions have grown nearly twice as fast over the past decade, compared with the previous thirty years – despite the global economic slowdown.
Meanwhile, we are extracting 50% more natural resources than was the case only thirty years ago – around 60 billion tonnes of raw materials each year. We are clearly not living within planetary limits – we already need 1.5 planets, and rising, to provide for our insatiable demands.
And let’s be clear, this is not just an environmental lament; our failing ecosystems and dwindling supplies of natural resources will ultimately mean economic decline, with severe financial consequences for all.
On the face of it, CSR is barely scratching the surface.
Of course, the failure to generate a real impact cannot be all down to CSR – it is a very complex world, after all – and many a good idea can stall, especially if badly deployed.
But, we have to ask ourselves – are we serious about making the necessary transformation in our businesses and economies, or are we simply motivated by trying to enhance our corporate image?
The emerging evidence doesn’t look good. According to a new analysis of 40,000 CSR reports, from around the world – developed by the Technical University of Denmark (DTU) – less than 5% of organisations made references to planetary or ecological limits, and only 31 organisations have actually engaged with these limits, to define science-based performance targets and strategies, to inspire changes in product portfolios or business models.
Could it be that at least 95% of CSR efforts are merely exercises in window-dressing?
Perhaps we should not be too surprised by the lack of transformative impact. There is a fundamental problem with the philosophy underpinning CSR as a business methodology.
ON THE MONEY!
In virtually all cases, CSR is founded on an assurance-based tick-sheet model, with the aim of reporting year-on-year incremental improvements, pretty much within the current framing of the business – which still has profit maximisation as its over-riding goal.
There are two key challenges behind this model and framing. Firstly, if we carry on with our business-as-usual mindset, we are highly unlikely to come anywhere near the necessary radical shifts required in business or in sustainability performance. Incremental change is not only slow, it is also not allowing us to penetrate deeply enough into the real issues at hand – such as, the sustainability of our purpose in business and the efficacy of our business models. I’m sure we’re all tired of seeing the latest, inauthentic glossy representation of an inherently unsustainable business model.
if maximising profit is our primary purpose, then everything else will be subservient to this aim.
Secondly, if maximising profit is our primary purpose, then everything else will be subservient to this aim. We can, perhaps, seek to optimise the returns we make, while delivering a balanced range of environmental and societal impacts, but it is highly unlikely we can aim to maximise profits at the same time. We cannot serve two masters: in this framing, CSR can only ever be an adjunct to the main purpose of the business. This might also explain why so many business leaders have tended to struggle with the business case.
If we accept that we need to go beyond simple incremental improvements and that we need to genuinely transform what we do – in support of a genuinely sustainable future – then we need to go much further. An assurance-based format can be appropriate when all parameters are fully known and are stable: integrating sustainability into the heart of business, within a highly volatile context, requires our strategies (and thinking) to be much more dynamic than that.
Bakker’s call for integrated sustainable business is, therefore, right on the money. There cannot be two models for doing business, going forward – or even two sets of metrics – based on business as usual, with a bolt-on CSR strategy. There can be only one integrated model.
It is powerful insights like this that led Unilever – one of the most progressive business organisations in the world today – to effectively close down its CSR department and to seek to integrate sustainability principles into everything it does. Sustainability responsibilities are now integrated within everyone’s role – not annexed as a separate, under-resourced department.
MAKE IT COUNT!
In reality, Bakker’s declaration is probably more of an insightful prediction. CSR is not dead, yet – although it probably will be, quite soon.
CSR is, at best, only a partial solution, which can be misused to create an illusion of responsibility, while delivering very little real change. There is a (sustainable) world of difference between reporting and looking good, as compared with the more earnest, but necessary, task of transforming our businesses and economies.
This is not to dismiss CSR as a total failure – far from it. We just need to stand back and see its role within a bigger picture of transition: in helping raise our consciousness and understanding, and in providing a valuable step towards what might come next.
CSR has served a purpose in creating a staging post for where we are now, but it is not, and never could be, the end state.
CSR has served a purpose in creating a staging post for where we are now, but it is not, and never could be, the end state. For all the reasons we have discussed, we should never expect CSR to provide all the answers. Building a good staging post is arguably a good result.
The real value in Bakker’s provocation is that he shakes up our perceptions of what good looks like, and helps us to see beyond our current and short-term horizons, rather than accepting today’s model as a statement of fact. Of course, this has major implications for all our businesses – everywhere.
If CSR is on the way out, then what next? Where will the real debate be this year? More on this, next time.
This article was originally published on the 2degrees network
Michael Townsend is the Founder and CEO of Earthshine Solutions. He is passionate about promoting the benefits of sustainable business, and author of The Rough Guide to Sustainable Business (forthcoming). Michael is an engineering graduate and MBA: a business transformation leader with over twenty-five years experience in a range of sectors. Michael has developed “best in class” performance for a range of organizations, including Norwich Union (Aviva) Insurance, BAA, British Airways, Mace, The Home Office and Gazeley, amongst others.