{"id":7322,"date":"2018-12-18T11:45:17","date_gmt":"2018-12-18T11:45:17","guid":{"rendered":"https:\/\/groupcaliber.com\/?p=1755"},"modified":"2022-01-24T13:11:55","modified_gmt":"2022-01-24T13:11:55","slug":"business-leaders-focus-on-csr-is-misguided","status":"publish","type":"post","link":"https:\/\/groupcaliber.banyodev.dk\/index.php\/2018\/12\/18\/business-leaders-focus-on-csr-is-misguided\/","title":{"rendered":"Business Leaders’ Focus on CSR is Misguided"},"content":{"rendered":"

CSR efforts in the business world are impressive and laudable, but the focus on CSR may have allowed companies to hide dubious ethics.<\/strong><\/em><\/p>\n

It was the darling of the socially responsible investment community: The\u00a0FTSE4Good Index Series<\/a>\u00a0\u2013 designed to measure the performance of companies demonstrating strong Environmental, Social and Governance practices \u2013 had it listed for several years in a row, while in 2013 it became global sector leader in the Dow Jones Sustainability Index. In the same year, it was awarded the German Investors Award for Responsible Business and was listed in the Global Compact 100 index.<\/p>\n

But in 2015, as the Dieselgate scandal unraveled, Volkswagen was removed from both the DJSI and FTSE4Good indices. It became clear to many that while it was saying and doing the right things on the CSR front for many years, the company engendered a culture that tolerated (if not encouraged) cheating to achieve commercial goals. As Robert Armstrong would\u00a0later write in Financial Times<\/a>, \u201c\u2026we have to assume something went wrong with VW\u2019s culture such that immoral behavior became acceptable.\u201d<\/p>\n

A similar thing happened at Wells Fargo. A long-admired leader of the financial services sector who had\u00a0handled the financial crisis better than others<\/a>, it counted \u201cethics\u201d as one of its five values, and had flaunted its \u201cculture of caring\u201d and bold \u201c2020 CSR strategy and commitment\u201d which won it many awards and much recognition as a role model in the financial sector. The account fraud scandal in 2016 crushed that reputation, and a subsequent\u00a0investigation<\/a>\u00a0blamed a sales-oriented culture that resulted \u201cin one of the worst banking controversies in years.\u201d<\/p>\n

These cases, and others like them, beg the question: have the notions of \u201cresponsibility\u201d and \u201cethics\u201d become completely disconnected in recent years? Corporate social responsibility is perceived by most as a term that reflects a company\u2019s moral and ethical responsibility beyond its legal duties. While it has grown in popularity with the rise of environmentalism, it was always seen as tightly connected to the discipline of business ethics \u2013 indeed the most universally accepted definition of socially responsible behavior in\u00a0ISO 26000<\/a>\u00a0lists \u201cethical behavior\u201d as one of its Seven Key Principles. Has this aspect of CSR been somewhat neglected?<\/p>\n

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Have the notions of “responsibility” and “ethics” become completely disconnected in recent years?<\/p>\n<\/blockquote>\n

It\u2019s easy to understand why businesses have increasingly focused their embrace and implementation of CSR on the social and environmental aspects of it \u2013 this was a natural extension of traditional corporate philanthropy, and it allowed for clear evidence and measurable outcomes. In fact,\u00a0triple bottom line<\/a>\u00a0reporting\u00a0 and the GRI framework that followed may have contributed to this \u201cnarrow\u201d view of CSR by highlighting environmental practices, labor conditions and community involvement.<\/p>\n

This is not to say that business ethics has been completely forgotten \u2013 most companies still focus on things like good governance, anti-corruption practices, transparency, code of ethics and so on. But unfortunately, these elements are often left to the legal and compliance departments to deal with, and are not typically seen as part of the company\u2019s value creation. Moreover, they\u2019re missing the most important ingredient \u2013 the proactive development of an ethical culture among both leadership and staff.<\/p>\n

The solution of course is not to do away with the term CSR (though some\u00a0attempts to evolve it<\/a>\u00a0are already underway). Instead, companies should broaden their perspective:<\/p>\n

    \n
  1. \n
      \n
    1. \n
        \n
      1. Shift focus from \u201cresponsibility\u201d to \u201cintegrity\u201d:it may be seen as semantics by some, but while responsibility is intuitively connected to duties and expectations from others \u2013 integrity suggests an internal moral code. As such, it applies to both intentions and actions, and creates a more direct link between the company and the individuals that comprise it; after all, the behavior of the company is the sum of the behaviors of its individuals.<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n

         <\/p>\n

          \n
        1. \n
            \n
          1. Be purpose-led:purpose is becoming somewhat of a buzzword, but the notion that a company needs to be driven by an idea that is bigger and higher than a commercial goal is\u00a0not new<\/a>. When companies are truly committed to such an idea, they can more easily and effectively shape their actions and behavior in a coordinated way \u2013 so that \u201cdoing good\u201d and \u201cmaking money\u201d don\u2019t become two disconnected forces pulling ethics in opposite directions. Had VW remained loyal to its original idea of building affordable and accessible \u201cpeople\u2019s cars\u201d rather than become consumed by the ambitious goal of being the world\u2019s biggest automaker by 2018 \u2013 perhaps things would have turned out differently.<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n

             <\/p>\n

              \n
            1. Prioritize leadership behavior:in any hierarchical organization leaders act as role-models, and companies are no different. When leaders and managers practice and demonstrate ethical behavior, and when they reward such behavior among others (and punish its absence) \u2013 an ethical culture will emerge. This is so much more important than having an exemplary code of ethics and conduct (which both VW and Wells Fargo did).<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n
              \n

              When leaders and managers practice and demonstrate ethical behavior, and when they reward such behavior among others (and punish its absence) – an ethical culture will emerge.<\/p>\n<\/blockquote>\n

              Call it CSR, CR, sustainability or corporate citizenship \u2013 there is no doubt that the world has benefited from business schemes to \u201cdo good\u201d for decades. But as long as this trend fails to build real business integrity and ethical cultures at the same time, trust in business will remain diminished and scandals like those that happened to Volkswagen and Well Fargo will keep occurring. It may be that the focus on the environment and society has distracted leaders from the importance of everyday ethics. Some\u00a0go further<\/a>to claim that sometimes companies use CSR to direct public attention away from other, harmful business practices \u2013 making CSR at best an exercise in window-dressing and, at worst, a moral fig leaf for companies whose culture is essentially immoral. Be it as it may, leaders should broaden their approach by adopting the principles above. If they do this right, being a CSR champion in the future just might cease to be such a short-lived title.<\/p>\n

               <\/p>\n

              This article has been originally published on Columbia Businss School Alumni resource<\/a>.\u00a0<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

              CSR efforts in the business world are impressive and laudable, but the focus on CSR may have allowed companies to hide dubious ethics. It was the darling of the socially responsible investment community: The\u00a0FTSE4Good Index Series\u00a0\u2013 designed to measure the performance of companies demonstrating strong Environmental, Social and Governance practices \u2013 had it listed for […]<\/p>\n","protected":false},"author":3,"featured_media":7476,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"industry":[],"class_list":["post-7322","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-knowledge"],"_links":{"self":[{"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/posts\/7322","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/comments?post=7322"}],"version-history":[{"count":3,"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/posts\/7322\/revisions"}],"predecessor-version":[{"id":7478,"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/posts\/7322\/revisions\/7478"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/media\/7476"}],"wp:attachment":[{"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/media?parent=7322"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/categories?post=7322"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/tags?post=7322"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/industry?post=7322"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}