Corporate Social Responsibility: Standards with a Conscience

2003-10-14

Corporate Social Responsibility or CSR.  It's a term that has seen its fair share of headlines with the scandals that have rocked the business world over the past five years, but it's a concept that has been around for more than a quarter century.

"It started out with an environmental focus but over the years CSR has evolved to reflect the economic and social aspects of doing business as well," said Dr. Kernaghan Webb, Chief Research & Senior Legal Policy Advisor, Canadian Office of Consumer Affairs, Industry Canada, and a member of the International Standards Organization's (ISO) Strategy Advisory Group looking into CSR standards. "Today, the spotlight is shining on corporate governance and companies' fiscal responsibility toward their shareholders, but this is only a small portion of what CSR encompasses."

Quite simply, CSR can be defined as the way a company achieves a balance of economic, environmental and social objectives while still managing the bottom line.  CSR shelters worker health and safety, human rights, labour relations, community development, poverty reduction, environmental protection, sustainable development, consumer protection, anti-bribery, corporate governance and philanthropy under one big umbrella.

"With more companies implementing CSR programs, the time is ripe to look at whether or not an international standard would be useful," said Webb.  "To function in a global market, businesses need a credible set of criteria for acceptable business practices no matter where they operate."  Other international groups have produced documents and guidelines that address the concepts of sustainability and CSR, including the Global Reporting Initiative, the OECD's Multinational Enterprise Guidelines, the International Labour Organization's conventions, Social Accountability (SA) 8000, and the United Nation's Human Rights Declaration and Global Compact.

Adding its voice to the discussion, the ISO formed a strategic advisory group to study the feasibility of developing and implementing a voluntary CSR management standard.  Chaired by Daniel Gagnier, Senior Vice President, Corporate and External Affairs of Alcan Inc., Canada, the group, formed in January 2003 and made up of 22 members from around the world, is working on a technical report and recommendations on the need for a unified international standard.  The report will be completed by the end of this year.  If the ISO accepts the group's recommendations, a CSR standard could be introduced by 2007.

Webb says that an ISO CSR standard would be relatively easy to develop because it would refer to guidelines already in place and would build on its own widely accepted ISO 9000 and ISO 14000 quality and environmental management standards.  "ISO has already constructed the basement and the first floor of the CSR structure.  It just needs to address the social aspect - the second floor if you will - to finish it off."

Gagnier agrees it's time that one unified CSR standard be developed and that members of the ISO Strategic Advisory Group are working hard to come up with an acceptable definition of what CSR is. "With CSR, everybody has been groping around in the dark for the same information and it was time we put our heads together to get a clearer view of what the concept actually means to people," he said.  "The beauty of this advisory group is that we've got people from all over representing different interests and who all have their own view of what CSR should be.  However, we agree there's a definite need for it.  Our ongoing discussions of how, when and why you implement CSR is part of a sharing process that ultimately leads to everybody pulling each other up by their bootstraps in order to do things better."

Accountability is the crux of CSR.  Savvier investors, concerned communities and other interest groups are demanding that corporations put in place a more transparent and dynamic management system, one that addresses the needs and concerns of the communities they work in, as well as any potential impact their operations might have.  A growing number of consumers are also becoming advocates of social responsibility, purchasing products and services from companies perceived to be good corporate citizens.

For Sondra Bruni, Chair of the Standards Council of Canada's Consumer and Public Interest Committee (CPIC), and of the Canadian advisory committee for ISO COPOLCO, good corporate governance will lead to more effective and profitable operations for companies as well as better returns for their investors and customers on all levels, especially given recent events.  "The loss of public confidence and trust in the integrity of corporations should be a wake-up call to the need for more effective, accountable and transparent governance," she said.  "The public is demanding more careful due diligence on the part of both corporate boards of directors and the government agencies in charge of overseeing them."

The immediate reason a corporation would want to embrace CSR is that it's a way of proactively identifying and managing their political, environmental, social and legal risks, according to Kernaghan Webb.  "CSR is necessary because both the private sector and the broader society are recognizing that businesses need a social license as well as a legal license to operate," he said.  "It's no longer acceptable for an oil company, for instance, to knock on the government's door and ask what they have to do in order to exploit an oil field.  Now they have to find a way of talking to all of the stakeholders in the vicinity of that field and get their consent.  When they do that, they have some degree of assurance they won't have any problems because the stakeholders are now part of the process."

Webb is certain corporations will embrace an ISO CSR management standard for the simple reason that the ISO is a globally recognized brand.  "There's a lot of information out there but it's either at a high level of generality or it's not authoritative. An ISO CSR standard that is transparent and interoperable would provide a strong framework - a structured process - that a company could follow and implement, no matter its size or location."

Though the benefits of CSR may be hard to measure in pure business terms, Daniel Gagnier says companies that court negative publicity because of environmental and human rights violations, or fiscal irresponsibility, will not only tarnish their reputation, but will watch their stock price plummet.  "Corporations that weave CSR into their business model will find it's a great motivator for common good.  Employees are proud to work for the company because it's giving something positive back to the community.  And that's ultimately good for business."

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This article first appeared in Volume 30 of CONSENSUS Magazine, 2003.  The information it contains was accurate at the time of publication but has not been updated or revised since, and may not reflect the latest updates on the topic.  If you have specific questions or concerns about the content, please contact the Standards Council of Canada.

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