MHC International Limited – News Item



December 2000



Michael Hopkins

The terms used in the attempt to convince corporations to become more attuned to their stakeholders know no upper bound. Corporate citizenship, cure corporate social responsibility, advice good corporate governance, the ethical organisation and now corporate sustainability are all terms that have been used by different commentators. No one body takes it upon themselves to reach common acceptable concepts and definitions. This would be a serious job for an international organisation like the World Bank, OECD or ILO. A common and agreed set or terms would be very helpful in todayís kaleidoscope world where concepts rain like confetti.

The notion of sustainability was originally thought of as development that seeks to be continuous amid worries that existing development will be resource constrained by the carrying capacity of earth’s natural resources and eco-systems. The term sustainability first came to widespread acceptance in the Brundtland report in 1987 where it was defined as development that fulfills the needs of the present without limiting the potential for meeting the needs of future generations. At that time the concept and study of sustainable development had hardly left the domain of environmentalists and ecologists.

More recently, the term ësustainabilityí has grown to encompass social and economic components as well as its historical work on the environment. This has developed into the notion of corporate social responsibility which is to create progressively higher standards of living, while preserving, and enhancing if possible, the profitability of the corporation, for its stakeholders both within and outside the corporation.

Thus, PricewaterhouseCoopers now define corporate sustainability as aligning an organisation’s products and services with stakeholder expectations, thereby adding economic, environmental and social value. And the Global Resources Initiative (GRI), that grew out of environmental work by the Coalition for Environmentally Responsible Economies (CERES) and the United Nations Environment Programme (UNEP), produced, in June 2000, the GRI Sustainability Reporting Guidelines that cover economic and social performance as well as the more ëtraditionalí environmental ones.

The world of business is embracing the notion of sustainability and many are now producing ësustainability reportsí ñ for instance the fast growing European services company Hays publishes its ëStrategy for Sustainabilityí on its web site – see Hays-plc.

And the Dow Jones Sustainability rankings put ABB as number one in the Dow Jones on its ësustainabilityí index and notes that there is mounting evidence that the financial performance of good performing sustainable companies is superior to that of companies that are ranked lower.

A report by BIE (Business in the Environment) cited a Financial Times/PriceWaterhouseCoopers survey of 750 Chief Executive Officers who were asked their views on the most important business challenges for companies in 2000. Of those challenges listed increasing pressure for social responsibility was ranked second only to recruitment of skilled staff. In a MORI survey in 1998, 86% of adults considered the environment to be a very or extremely important part of corporate responsibility.

However, the jury is still out on whether having sustainability or responsibility values improve a companiesí bottom line? But long-term corporate stayers do have sound social values as Collins and Porras impressively showed in their book Built To Last.

So, should Corporate Social Responsibility (CSR) now read Corporate Sustainability (CSu)? There is strong semantic attraction for that since it is clear that the notion of sustainability has an attractive ring about it to hard-pressed CEOs trying to keep, and raise, share-holder value as well as keeping an eye on a plethora of social concerns. While responsibility appears, on face value, to do with the ‘niceí things a company should do rather than keep in business and work on shareholder value.

In fact CSR and CSu are two sides of the same coin. CSR defines the social responsibilities of a corporation which, if implemented, will lead to the corporation being sustained (Collins and Porras). CSu has moved away from purely environmental issues to encompass both social and economic concerns. CSR has, perhaps, more lofty goals since it talks not only about issues that will sustain a corporation but also those for which a corporation is responsible. Whether there are additional concerns in the CSR toolbox that will, ultimately, provide for longer-term sustainability than those in the CSu toolbox is a point worthy of further discussion.