Growing consumer awareness about the impact our buying decisions have on our planet has brought about changes in the way businesses try to appeal to our green ethics.
Some companies are measuring carbon emissions and buying wind power credits. Others are buying fair-trade coffee, sourcing Forest Stewardship Council certified wood and purchasing fabrics from non-sweatshop sources. How can consumers and investors sift through the hype to find the companies that are genuinely incorporating sustainability into their operations, and thinking beyond the bottom line to the impact they’re having on the people and places around them?
There’s no doubt that increased attention to marketing, whether it highlights a company’s commitment to energy efficiency, waste management or ethical procurement, is a step in the right direction, but true responsibility is surely more than selling re-usable bags or a new product line of organic produce. What lies behind the facade of the upstanding corporate citizen? If industry is to be a vehicle for social change and environmental responsibility, what are the driving forces and barriers in letting innovation flourish?
While corporate social responsibility (CSR) is not a new concept, climate change is arguably the biggest global issue pushing this line of thinking to the top of management agendas in organizations big and small. Consumers and employees are demanding more environmentally and socially responsible products and more responsible business operations — and many corporations are answering the call by upping the ante on their product and service offerings. Experts in this field, however, say that an integrated approach is still a great challenge for Canadian companies to embrace.
“The definition I use is fairly broad. CSR tends to be all the programs a corporation has that engage the community other than achieving their market objectives. [This includes] the investment they’re making in the community and engagement with stakeholders who aren’t suppliers or customers,” says Ronald Strand, an instructor in fund development and corporate philanthropy at Mount Royal College. Local examples of CSR popping up in Strand’s classes include First Calgary Savings, a local credit union that leverages its smaller investment potential against local involvement and volunteerism; Trico Homes, a Calgary-based residential building company; and Enmax Corporation’s Greenmax program.
TRIPLE BOTTOM LINE
It starts with understanding the values entrenched in the responsible business movement and how deep the company’s vision permeates through the organization.
“The only way to build truly sustainable companies is that it has to be deeply felt from the board and CEO level,” says Karen Kun, publisher of Corporate Knights, a Canadian magazine that promotes responsible business and measures corporate citizenship and sustainability.
The classic example is Ray Anderson of Atlanta-based Interface Carpets. Featured prominently in the 2003 documentary The Corporation, Anderson set out to make his business a restorative enterprise by the year 2020 when he had a so-called “eco-epiphany” in 1994. Realizing he wanted to shift his company’s operations from simply complying with environmental regulations to actually restoring the environment it operates in, Anderson set off on a quest to radically revolutionize an industry known for its toxic dyes and adhesives.
“What’s so exceptional about Ray Anderson is that he looked at a traditional company for a way to transform it,” says Kun, who is quick to add that we need more visionary leaders like him in the corporate world.
A social entrepreneur herself (Kun and business partner Tatiana Glad started Waterlution, a non-profit working on water issues in 2003), she speaks passionately about the way corporations are starting to integrate responsible business practices into their operations. She believes that many companies are doing the best they can, but it largely depends on whether a company’s efforts come from the ground up, or are facilitated by a visionary leader.
Many companies, especially multinationals, are in a “mixed state,” according to Kun. They are starting to offer better social and environmental products such as fair-trade coffee, tea and cocoa from coffee shops, organics at the local grocery store, organically grown cotton and so on, but at a premium price.
“From a business standpoint, it hasn’t reached scale enough to make it economically viable,” Kun says, referring to the newest product offerings we’re seeing on store shelves touting labels such as “fair-trade organic,” “sustainably harvested” or “eco-friendly.”
MEASURING THE IMPACT
“You have a social impact company because you exist [as an organization],” says Stephanie Robertson, president of SiMPACT Strategy Group, a Calgary-based consulting company that works with corporations and non-profits to measure, manage and evaluate their social impact. Social impact is a term Robertson prefers to use as a simpler, more comprehensive way to sum up all the ways an organization has an impact on society, the economy and environment.
“We really want to make sure companies understand their social impact across the breadth of their stakeholders and their operations. I don’t believe you can have an effective social responsibility program unless you actually understand that impact. Understanding that impact moves it from PR to a management approach,” she says. On the flip side, Robertson’s firm works with non-profit organizations to help them understand how they create social value so that they can position themselves as a potential investment in a social outcome rather than a donation.
Well-known pioneers such as Mountain Equipment Co-op and VanCity Savings Credit Union are consistently held up as examples where the management has embraced an overall mission of sustainability within the organization from the top down. As consumer demand and other global pressures urge all companies to show their green hearts on their sleeves, multinationals and small local businesses alike are diving into the CSR arena. From IKEA, Enbridge, RBC and Shopper’s Drug Mart, to Starbucks and the Good Earth Coffee Company, most company websites have the magic words emblazoned within their mandate. However, third-party scrutiny and measurement is what truly sets the leaders apart from the rest.
“I think the way companies can engage the public more effectively is to be realistic about what they can do in a year. Set goals publicly, and share those goals with their key stakeholders, and encourage those stakeholders to come back and make sure they meet those goals. They’re not waiting until they’re perfect to talk about the issue,” Robertson says.
One of the surest ways for a company to determine how well it’s doing, according to Robertson, is to submit to external scrutiny of some kind, such as a benchmarking group.
“Very few CEOs understand how to integrate this into their companies in a deep and methodological way,” she says, going on to explain that Canadian companies have been reluctant to come out with policies and openly explain that they are works in progress. She points to social indicator reporting coming out of Britain (from companies such as Unilever or Unica), where clear annual goals are set and reported on regularly.
Robertson says that the breadth of questions asked in Canada is narrower than those used in Europe. One addition Robertson would like to see to overall reporting is customer response time — the easier it is for a customer to complain about the service and receive a response, for example, the better it bodes for how a company relates to its clients. There are countless examples. Robertson says, such as VISA cards. “Are they monitoring the number of students who get into debt in the first year or two that they get one?” Asking questions like these moves companies beyond making a profit and giving a little something back to the community, to really assessing the overall impact they’re having on the world they’re working in.
“In Canada at the moment... I actually do think the understanding is significantly limited compared to CEOs and executives in the U.K.,” Robertson says. Tellingly, one quarter, or 23 out of 100 of the “world’s most sustainable companies” for 2008, according to the Global 100 ranking, were from the U.K. and only three Canadian companies made the list (Nexen Inc, TransCanada Corp and Royal Bank of Canada).
SiMPACT, incidentally, is a manager and facilitator of London Benchmarking Group (LBG) Canada, a consortium of companies working to develop “a higher standard in the management, valuation and performance measurement of corporate community involvement.” Some of the LBG Canada participants include First Calgary Savings, Enmax, Enbridge, Epcor, ConocoPhillips and the CBC.
There is indeed a dizzying array of indicators that third parties can use to raise the CSR bar, so to speak. As responsible business practices continue to expand, there are as many ways to assess how a business measures up. Strand says that when you’re looking to invest in businesses, either as a consumer or as an investor, look at how they’re being measured by outside groups, the media response they’re receiving, and how they measure up to other businesses in the same industry.
Strand suggests looking at some of the standards: The Global Reporting Initiative (www.globalreporting.org), The United Nations Global Compact (www.unglobalcompact.org), questionnaires used by Corporate Knights, LBG indicators and many others.
When asked where Kun sees the responsible business trend going in the future, she says, “I really hope it’s not a trend. Canada has really opened its eyes in the last two years. It’s sometimes overwhelming how much everything is green now,” Kun says. “I hope they [companies] start seeing that they’re just at the start of what their company is capable of doing. I hope that companies start seeing the environment and sustainability as a viable part of business.”
