CSR & Sustainability in Troubled Times
This is the time for
Corporate Social Responsibility (CSR) and
sustainability. There are three reasons that Directors
and Senior Management (C-suite) need to escalate CSR and
sustainability within their organizations:
- CSR and sustainability have become key
elements of an organization’s demonstration of its alignment
with the values of the societies in which it does business. The
current crisis will place greater pressure on organizations to
demonstrate that alignment.
- Regulation is going to increase in both
span and intrusion. There exists the perception that deregulation
or self-regulation has contributed to the current crisis.
This will lead to greater direct oversight and regulation of
businesses. Organizations own statements of commitment to CSR and
sustainability will be backed up by regulation.
- Directors need confidence that the CSR
and sustainability information that is externally reported is
accurate, and will not result in public relations, regulatory or
negative efficiency exposures to the business.
Directors and Senior
Management should be taking the time now to ensure that CSR and
sustainability are appropriately prioritized, to establish their
credentials in the market, and to ensure that they are prepared for
a world of greater regulated CSR and sustainability
reporting. Read the full article here.
Background
CSR and sustainability
have taken on a greater importance over the past decade, driven by
a combination of regulation, operational efficiency, competitors
positioning and a greater emphasis on being able to demonstrate
ethical business practices. Today over 85% of the S&P100
provide some form of sustainability reporting, while virtually all
of the FTSE100 provide various CSR and sustainability
reports.
One thing is clear; as
government and business work through the current financial crisis,
we will see significant increases in regulation and increased
scrutiny over financial and material non-financial information such
as business strategy, governance structures, CO2
emissions and social impacts. This will include the processes
for creation of reported information; for both public and private
organizations. Directors should expect increased emphasis on
systems of internal control, and reporting obligations comparable
to those we have seen introduced in the SEC registrant companies in
the US (with reporting being a high
probability).
CSR and sustainability
are a demonstration of an organization’s standards of ethical
behaviour. Increasingly, external audiences expect that
strong ethical behavior, and responsible and sustainable business
and commercial practices, reflect a respect for the societies in
which the organization functions - its license to
operate.
Of course, there
remain those who think CSR and sustainability are not core to the
business, or have treated them primarily as marketing and
positioning activity. Finally, there remain some who simply
discount the need and value of CSR and
sustainability.