MHCi view of CSR & Sustainability in 2012

 Michael Hopkins, Adrian Payne and Martin Summers[1]

 Preface

MHC International Ltd’s (MHCi) sixth annual update took place in Central London with invited experts drawn from the business, academic and NGO world.  This beginning of the year, invitation only, event is designed to keep MHCi’s work on the cutting edge of CSR and Sustainability issues to ensure that our research, advisory services and executive programmes are as up-to-date as possible.

Introduction

This year’s sixth MHCi annual CSR & Sustainability Update expert group meeting, with a range of CSR practitioners and commentators, once again looked at the prospects for CSR in the coming year in the context of changing trends and themes in the corporate, social, political and economic spheres.  MHCi uses these face-to-face intense discussions for its advisory services to companies and governments, and as an input into its executive programmes[2].

Summary of prospects for CSR in 2012

1.       The decline of trust in brands, companies and sectors continues[3].

This should however be seen in a positive light as it creates:
a)  opportunities for more open, honest and direct debate between consumers and companies, governments and other stakeholders about the key issues and future for certain sectors.
b) opportunities for greater competitive advantage for those companies that do manage to build ‘trust relationships’ with consumers and other stakeholders. While Steve Jobs exemplified how charismatic leadership can help build brand trust, the top 10 most trustworthy brands in the US illustrates that brand trust can be built via a CSR programme that is embedded throughout the business[4].

2.       Trust in governments has also declined.

This has led to greater scepticism about the ability and inclination of governments to tackle key sustainability and other issues decisively and comprehensively, as indicated by widespread protests in the crisis-hit Eurozone and in opinion polls about government’s ability to deliver on jobs, growth and climate change, etc. Against such a background the Rio+20 Earth Summit arguably holds little promise for delivering significant change.

3.       CSR is going through another period of redefining and broadening.

A few years ago it looked as if CSR would become more tightly defined around ‘corporate responsibility’ (getting the basics of company responsibility right) and ‘sustainability’ (focusing on the key long term material issues for a company and its stakeholders). But the extent of the financial crisis and its social impacts mean that there is renewed emphasis on financial and government responsibility, and an increased scope for responsible capitalism.

The terms of the CSR debate have also been given an impetus by Porter and Kramer’s Harvard Business Review article on ‘Shared Value’[5] and wider discussions about what some have called ‘sustainable capitalism’[6] (often used in contrast to ‘casino capitalism’.) Although this debate is in flux, and covers many topics, the need to rethink financial markets and the link between executive remuneration and performance[7] are common themes.

4.       The demand for greater transparency, disclosure and non-financial reporting continues to increase.

There have been several very important developments in reporting: ISO 26000; the growing interest in integrated reporting[8]; the development of GRI4[9] (GRI’s next generation of guidelines); the revised OECD multi-national guidelines[10] and the EU’s push for a wider social responsibility concept and more social and environmental reporting in its 2011-2014 CSR strategy. The number of companies reporting on sustainability is also increasing: KPMG research shows 95% of the world’s 250 biggest companies now report on their sustainability performance, up from 80% in 2008[11].

Some seminar participants did however ask whether too much reliance is being placed on reporting as a tool to drive and monitor corporate change, given that one of the lessons of the financial crisis is that accounts (commercial and governmental) cannot be trusted to give an accurate picture of, or to be, a good guide to future developments.

5.       Social media has shown its ability to drive major political change but its potential as an agent of change for sustainability and in driving company change is yet to be established.

While social media has clearly played a major role in the Arab Spring and in political protests in the Eurozone, and has proved invaluable to many companies in building relationships with consumers, it is not at all clear how important it has been, nor can be, in putting pressure on companies to change their practices from a CSR perspective. The combination of a vibrant civil society, dynamic mainstream media, and a critical populace still seems to be one of the best ways of keeping companies alert and responsive to changing social trends and demands. However, social media could perhaps play a role in coordinating (and thus increasing) shareholder activism.