CSR & Sustainability in Troubled Times: The Drivers
CSR and sustainability can be viewed as the practical expression of an organization’s ethics. It is also a pro-active tool to manage and shape stakeholder expectations. Finally of course it can, and should, be viewed as a strong driver of improved business performance, providing opportunities to implement performance efficiency and effectiveness improvements across the organization.
Balanced scorecards and strategy maps have grown into almost ubiquitous use due to their ability to help organizations consider a number of business drivers to achieve strategy. CSR and sustainability provide an additional set of measures that can positively impact overall organizational performance and that should be included in the balanced scorecard. For example, the DVFA (the German Institute of Investment Analysts) have developed a set of CSR and sustainability indicators that their members are encouraged to use in valuing companies. Organizations should consider including some of these metrics in their internal reporting.
One area of significant importance is the measurement and reporting of CO2 emissions. While not covering all organizations (yet) there are two drivers that are increasing the range of organizations that must track CO2 emissions. These drivers are:
- Caps on total CO2 produced. There are organizations in carbon- intensive industries that are subject to emissions caps. These organizations must measure, report, and potentially purchase carbon credits to cover excess tons of CO2 produced. Conversely, they are able to sell excess credits representing tons of CO2 not produced.
- The Carbon Disclosure Project (an NGO launched in 2000 at No 10 Downing Street), which is engaged in a ‘name and shame’ campaign to encourage organizations to report on the levels of CO2 that they produce and plans on how they will reduce their CO2 emissions.. To date, over 3000 organizations have provided reports to the CDP. Has yours?
As another example, historically, electricity bulk purchasing has been a procurement issue. Many organizations now pass budget responsibility for electricity consumption directly to data-centre director, with the result that a formerly hidden cost (to the data-centre director) becomes a cost element that is within his or her direct ability to manage. When viewed through the CSR and sustainability lenses, this leads to both a reduction in power consumption and therefore a corresponding reduction in tons of CO2 produced, and leads to reductions in costs of data-centre overheads.
Many organizations fail to effectively link external CSR and sustainability activity to key business strategies and objectives, or to the organizations’ key performance indicators. In these cases the organization can be squandering resources pursuing non-core or non- core supporting, but socially beneficial activities.