1.04.2007 - 12:01am ET

Corporate Social Responsibility (CSR) shifted from the periphery to the mainstream in 2005; in 2006 it dominated headlines and catapulted into the heart of our collective consciousness. CSR initiatives such as microfinance and "green" energy impacted lives and won allegiance--from the poorest of the poor to the richest of the rich to the sexiest of the sexy.

In December, the Nobel Peace Prize was awarded to Muhammad Yunus and the Grameen Bank, elevating microfinance to global notoriety. The award celebrated the role that poverty alleviation and financial empowerment play in nurturing peace and fostering social and economic justice. It capped off a banner year for microfinance in which the giant academic retirement fund manager TIAA-CREF committed $100 million to microfinance. The influential Bill & Melinda Gates Foundation filtered some of the $31 billion left to it by investment guru Warren Buffett into microfinanciers such as Grameen Foundation USA, and Pro Mujer, paving the way for philanthropists and entrepreneurs alike to support microfinance. The Gates Foundation will also use some of the Buffett money to pursue its goal of curing the world's 20 leading fatal diseases.

If 2006 had an official color, it was certainly "green," as "treehugging" transformed from a pejorative to an accolade. The "Al Gore movie"--the street name for An Inconvenient Truth,--raised mass awareness of the dangers of global warming and introduced the linguistic shift from climate change to climate crisis. Other movies also advanced the green agenda. George Clooney and Matt Damon lent star power to Syriana, which addressed the environmental, political and economic issues of “peak oil”. Behind the scenes, Jeff Skoll's Participant Productions purchased renewable energy credits (RECs) from NativeEnergy to make the production of the film carbon neutral.

"Carbon neutral" was the New Oxford American Dictionary "word of the year," with companies contributing significantly to this green trend that garnered cover stories in mainstream magazines such as Time, Newsweek, Wired, Inc., Fortune, Elle, and Vanity Fair. For example, Wells Fargo became the largest corporate purchaser of RECs in the US with its October 2006 purchase of 550 million kilowatt hours of renewable wind energy through 3 Phases Energy. In addition to purchasing carbon offsets, companies are increasingly powering their operations directly with green energy. In October, Google, leapfrogged over GM, Johnson & Johnson, and FedEx to become the company with the largest solar installation in the US by mounting over 9,000 Sharp solar panels on the roofs of its Mountain View, California campus (dubbed Googleplex.)

CSR addresses not only beneficial company actions, but also those with adverse environmental and social impacts. Drama unfolded from October on as Oxfam America accused Starbucks of prompting the National Coffee Association to oppose Ethiopia's application to trademark its regional coffee names such as Harrar and Sidamo, and Starbucks defended its actions. In other activists’ endeavors earlier in the year, Amnesty International published a report detailing the role of Yahoo!, Microsoft, and Google in limiting freedom of expression in China.

On the governance front, 2006 was a record year for shareowner activism. Almost a third of these shareowner resolutions going to vote received over 15 percent support, double the results from the previous two proxy seasons. This year’s tally was the highest documented since 1973. In an apparent victory for shareowner democracy, a federal appeals court essentially usurped the regulatory power of the SEC. The SEC had "punted" on the issue of allowing shareowners access to the proxy to nominate directors by proposing a rule in 2003 but never implementing it. The judges ruled against AIG and in favor the American Federation of State, County, and Municipal Employees (AFSCME), allowing its pension fund to file resolutions seeking proxy access to nominate directors. Further clouding the governance scene, the backdating stock options scandal continues to widen and reveal ever more sordid evidence of unethical corporate conduct at Apple and more than a hundred other companies. At the same time, Treasury Secretary and former Goldman Sachs, CEO Hank Paulson financed a blue-ribbon panel that recommended scaling back Sarbanes-Oxley.

As with environmental issues, star power fueled interest in social issues as well. Wrapping up 2005 at a benefit for the human rights organization WITNESS, Angelina Jolie set the stage for 2006 human rights initiatives, by recounting her activism in helping secure key commitments from Sierra Leone's president to implement the Truth and Reconciliation Commission recommendations in the wake of the country's 11-year conflict. Sierra Leone is also the setting of the Leonardo DiCaprio film Blood Diamond, which shone a spotlight on the sale of illegally mined stones to fuel wars in Africa. The Kimberley Process, collaboration between nongovernmental organizations and companies to certify responsibly produced diamonds, is one of many voluntary CSR initiatives whose awareness was raised.

This year saw the launching of new CSR initiatives, such as the United Nations Principles of Responsible Investment to promote socially responsible investing (SRI). It also saw the revision of other important voluntary CSR initiatives, such as the third generation of Global Reporting Initiative (GRI) Sustainability Reporting Guidelines (dubbed "G3"), as well as the second generation of the Equator Principles, which now has almost 50 banks committing to social and environmental standards for financing major infrastructure projects such as dams and power plants.

Many companies also voluntarily implemented codes of conduct to guide ethical business decisions and responsible supply chain management. Gap and Nike continue to lead the pack on this front. Gap recently discontinued sourcing from 62 factories where the company discovered violations of its Code after inspecting some 4,500 factories worldwide. Nike dropped a Pakistani soccer ball supplier due to child labor concerns and other violations.

Finally, 2006 hearkened back to 2000 when the purchase of Ben & Jerry's, by Unilever, raised the question, “What becomes of small, socially responsible companies when they are acquired by large corporations?” In 1993, Tom's of Maine cofounder Tom Chappell wrote The Soul of a Business, and this year, Colgate-Palmolive bought the company, prompting some to question whether the business ‘sold’ its soul. In a similar development, the Body Shop sold on the auction block to L’Oreal after tumultuous periods as a private and public company. Leaders of the CSR community are addressing this dilemma, trying to create a model for small businesses that insures their commitment to social responsibility when acquired.

If all this happened in 2006, imagine what we have to look forward to in 2007…

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Post a comment below: Wade Noccer    2007-01-04 13:58:03 This report is the reason I read csrwire every day. Thank you. *Your Comment: *Name: *E-mail (will not be displayed):   Notify me when others add comments to this discussion. Verification String (Six characters shown at left)