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Chris Milton

Chris Milton

Corporate Values on the Corporate Website

the-philosophers-stoneWouldn’t it be great in these days of gloom to find something bright, a ray of sunshine like a philosopher’s stone to bring businesses together in everlasting win-win situations?

Well, according to Business In The Community (BiTC) there is such a thing: a company’s statement of corporate values.

“A Purpose Beyond Profit”

At the beginning of the month BiTC released a briefing paper entitled “The whys and hows of corporate values”.

At its heart is a list of the benefits a company can reap from having a good, strong set of corporate values.

The actions required boil down to stakeholder engagement.  Employees, customers, suppliers and clients are all much more likely to be loyal to a company which has a clear ethos and understands its position in the wider world.

The paper also has one of the best definitions of corporate values I’ve come across:

It is not a mission statement that describes what task the company aims to fulfil. Neither is it a set of commercial objectives. …. Corporate values are about what the company stands for and how its employees behave. They are about framing a role for the business that gives it a purpose beyond profit. (my emphasis) [Read more…] about Corporate Values on the Corporate Website

Bringing CSR To The Banking Sector

and-the-question-isConnections. The world revolves around connections.

Businessmen love connections because it brings them business by word of mouth. Not only is this a pleasant ego boost, but also because it saves on that month’s advertising budget.

Consumers love connections because you will always trust an acquaintance’s opinions more than a total stranger’s. For instance, we just changed our gas & electricity supplier to one professionally sold to us by the grandmother of our daughter’s classmate.

And journalists, like me, hoard connections. Maybe one day you’ll need that person’s insight, or maybe one day they’ll feed you a good story. I’ve probably just written yours down while you were reading this.

Really great journalists end up working for major news outlets where their highly informed commentary will influence millions of people. At this pinnacle your storytelling ability will be excellent and further promotion can rest more upon the contacts you have to give that story the extra colour.

One such major news outlet is the BBC. [Read more…] about Bringing CSR To The Banking Sector

The Equator Principles : A Brief Overview

Dalmore Boys Club Spot The Ball
Click Here For The Solution

Anyone remember spot the ball competitions? A strange photo of football action had the ball removed and you had to place an X where you thought the ball was. The winner won something, possibly cash.

Talking about business sustainability without mentioning money is a bit like a spot the ball competition. You know it’s there, an essential part of what’s going on, but spotting it can be very difficult indeed.

This is where the Equator Principles (EP) come in; a set of benchmarks put together to bring a sense of sustainability to business financing.

Governance of the Principles
The initiative was created in 2003 by the leading banks of the day, including Barclays, Citibank and ABN Amro. It uses the policies of the World Bank and the International Finance Corporation (IFC) as its foundation.

They apply to all projects which financial institutions may engage in with financing of over $10m. This includes both direct lending by the banks and financial consultancy.

In addition, the working groups which govern the principles are not wholly focussed upon the banks. They include representatives of NGOs, Socially Responsible Investment analysts and the banks’ client base.

Inevitably this means that the banks and their clients complain that the principles go too far while the NGOs complain that they don’t go far enough.

This is good and it is heartening to see both sides engaging with one another and feeling able to air their views freely.

Equator Principles Homepage

The Equator Principles Themselves
There are Ten Principles. Any institution signing up to them commits to ensuring any project it is involved in with a spend of over $10m will conform to these principles.

They are relatively simple and straightforward and define the standards, management systems, consultations and monitoring which the bank should require of the client.

These provide a clear pathway for any institution wishing to improve the sustainability of its activities. These steps are underpinned by policies from the IFC and World Bank which provide the real meat.

For instance, the principles embrace both the IFC’s Eight Performance Standards on Sustainability, ranging from Cultural Heritage to Pollution, and the World Bank’s 41 industry specific Environment, Health and Safety guidelines.

ABN Amro
Equator Principles Figures

Transparency and The Equator Principles
When the EP was first launched there was one major criticism which was levelled at it: transparency. Much like the UN Global Compact, in it had placed more emphasis on signing up institutions than on monitoring their commitment.

To try and rectify this, the principles were updated in 2006 to include a tenth principle to which requires institutions to report at least once a year upon their activities under the principles.

As a minimum this requires banks to report the number of projects they have been involved in. The associated guidance notes encourage institutions to break the information down further, for instance by country or sector.

Detailed figures, such as those provided by ABN Amro, give a tiny glimpse into which projects a bank has been involved in. However this should be only the start if the banks’ disclosures.

For example: what about the bank’s governance? Is the EP included as a standard part of staff training, as appropriate? How will a bank monitor EP compliance and how will it censure a client if they fall out of compliance?

The Equator Principles Should Lead Finance Sustainability
There is no doubt that the EP acts as a force for good within the banking industry.

In the past year its membership has grown by nearly 20%, includes a quarter of the top investment banks in the world and has recently embraced Industrial Bank Co, one of the largest banks in China.

However, having a ball is only the first part of a good game of football. The rest of the sport is made up of robust rules and regulations to ensure one side or another isn’t unduly favoured.

If the quality of the benchmark’s disclosure requirements isn’t improved the EP could encourage accusations of being a vehicle for greenwashers.

This would be a shame because finance is undoubtedly modern society’s main driver. As such the EP should be a leader, not a follower, in ensuring a sustainable economy is built.

CSR Doesn’t Pay — A Response

This post is a response to David Vogel’s article “CSR Doesn’t Pay” , published on forbes.com on 16th October 2008.

Before writing it I checked out who David Vogel is. He holds the Solomon P. Lee Distinguished Professorship in Business Ethics at UC Berkeley Haas School of Business.

Wow, not someone who I’d readily cross swords with. However, he has his views and I have mine. We disagree. And here is why…..

What Is CSR?

Corporate Social Responsibility (CSR) is all about ensuring businesses do not forget the social cost of their pursuit of financial profits.

A horrendous, but thankfully rare example would be that of Chevron in the Amazon Rainforest where the company extracted oil for the massive North American petrol market.

They left behind them a poisoned ecosystem, drenched with chemicals and thoroughly unusable. Their methods would not have been tolerated in their target market but the company’s primary concern was, it appears, the cost of the operation not the health of those involved or the legacy it left behind.

CSR is about taking responsibility for your actions. Instead of recognising the need to clear up this mess and take action Chevron has consistently ducked the issue and tried to get others to shoulder the burden.

The core of the CSR agenda is to get companies to understand the ramifications of their actions and plan for them ahead of time, not try and ignore them or sweep them into dusty corners when things go wrong.

What CSR Is Not

There are three very important things that CSR is not.

It is not about philanthropy. The general giving of wealth to help needy, social or community programmes should be applauded to the rafters. However, it has nothing to do with responsibility.

Neither is it about the export of values. For example, the western garment industry relies in part on the nimble fingers of children to do the most delicate works of stitching and embroidery. Theirs is a different cultural, social and economic situation to the West’s; the two should not be homogenised.

Finally, CSR is not and never has been about making money. It is about treating the people who work for a company and the community within which it operates with respect.

Money only comes into it because businesses have, by definition, to be able to cover their costs. So CSR should not, without good cause, result in a company making a loss. That is different to CSR making a profit.

What Did Professor Vogel Say?

The Market For Virtue Frontcover

Professor Vogel starts the Forbes article brightly, stating that there’s a lot of buzz about CSR and how it will make a company more profitable. This, he wishes to say, is hogwash and most of the rest of the CSR community will agree with him.

However his rationale for wishing to destroy this myth is jaw dropping:

There is a “‘market for virtue,” but it is a very limited one. Nor is it growing.

I was so taken aback I had to read this several times just to make sure I had read it correctly. Still unconvinced that I’d understood the argument correctly, I went and leafed through a list of his publications.

Included in these from 2006, is “The Market for Virtue: The Potential and Limits of Corporate Social Responsibility”. An extract from this book states:

There are important limits to the market for virtue. The main constraint on the market’s ability to increase the supply of corporate virtue is the market itself … There is a place in the market economy for responsible firms. But there is also a large place for their less responsible competitors.

So no, I hadn’t misunderstood. Professor Vogel considers CSR to be a commodity, something to be valued and traded. Having taken this in and fully digested it, I wasn’t too surprised to find the Forbes article continued:

Part of the reason why CSR does not necessarily pay is that only a handful or consumers know or care about the environmental or social records of more than a handful of firms. “Ethical” products are a niche market: Virtually all goods and services continue to be purchased on the basis of price, convenience and quality.

What’s Wrong With This?

For starters, I’m rather shocked that Professor Vogel has chosen to make CSR synonymous with “virtue”, a word loaded with overtones of morality and righteousness.

No one is suggesting that businesses should replace spiritual organisations as the ultimate paragons of virtue. To say that they are, when the only purpose is to knock the suggestions down, seems self serving and base.

Then there’s the market. Professor Vogel states in the article:

The market has many virtues, but reconciling corporate goals and public purposes is unfortunately not among them.

Good. In that case let’s be clear. CSR is not a “niche market” … it’s not about making profits or being financially valued. In fact, it’s the very antithesis of this.

It is a public purpose. It is something which is necessary for the greater good of all mankind. It’s about ensuring the pursuit of financial value doesn’t get put before caring for our fellow humans and our environment.

The Future Of CSR

Responsibility

In the quote above Professor Vogel states that consumers don’t know or care about the intricacies of CSR. They don’t know or care about the intricacies of financial reporting either, but that doesn’t stop it being important.

The truth is that this commoditisation of CSR has come about because businessmen are desperate to try and stave off regulation in this area. They’re trying to fit something into the market which doesn’t belong there.

If Professor Vogel is a leading CSR academic then he needs to be listened to. If the market cannot take on board CSR then the only option is far reaching and robust legislation.

Professor Vogel’s alternative, to allow some companies to be more irresponsible than others, is like saying we can have some politicians who are more corrupt or some businessmen who are more fraudulent. This is unthinkable.

At the bottom line there is no room in the advancement of human decency and respect for any talk of money. On the other hand, to suggest there should be a market in selling human misery sounds awfully like an argument which leads to slavery to me.

Picture Credit: “Haas Business School” by toolfan.hess from Flickr under Creative Commons Attribution License.

Creating a CSR Buzz in Your Pocket

One facet of the sustainability movement is that of corporate social responsibility, or CSR. This is the principle that businesses should recognise the wider social impact they have upon their and their suppliers’ workers and communities.

Many still misunderstand what is meant by this, believing it to be philanthropy rebranded. They limit their CSR activities to supporting grass roots causes, or donating a percentage of their annual income to a Charity of The Year.

Now a new report from makeITfair demonstrates how a simple business CSR policy, applied to the relevant employees, can profoundly affect the world, giving everyone a CSR buzz in their pocket – literally. [Read more…] about Creating a CSR Buzz in Your Pocket

Banks Demonstrate Casual Approach to Sustainability

HBOS Homepage

On 19th September 2008 I realised something rather profound … I’m now a Lloyds TSB customer. Both my wife and I have always had a Halifax account (although it’s not my main one) but I’ve always had an aversion to Lloyds TSB.

Now the two are coming together to create the UK’s first SuperBank. For no other reason than this I’ve decided to jump on the bandwagon and make Banking, specifically Lloyds TSB and HBOS, the first of my FTSE 100 Website reviews. [Read more…] about Banks Demonstrate Casual Approach to Sustainability