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Will BSR & Its Member Companies Step Up to the Challenge? A Rebuttal

Does the critical mass of BSR member corporations want to be the tipping point for how the U.S. corporate/financial system operates?

Submitted by: Dr. Raj Thamotheram

Posted: Nov 20, 2012 – 10:34 AM EST

Tags: bsr, csr, investors, sustainability, csr report, politics, corporate governance

 
Rajthamotheram

Editor’s note: Yesterday we published an editorial penned by Dr. Raj Thamotheram titled Will BSR & Its Member Companies Step Up to the Challenge? where he examined the results of the latest BSR/Globescan survey and asked whether BSR could elevate its strategy to drive its member companies to lead the shift to sustainable business practices.

In response, the BSR team sent in some clarifications and helpful excerpts from the survey to help showcase the debate further – and add their perspective to Thamotheram’s questions. Here’s their response interspersed with the author’s rebuttal:

By Raj Thamotheram

I am very grateful to colleagues at BSR for having taken the time to review the article, which they consider to be “incorrect in a few important ways.”

Strategy & Values in Action

Their first point: “the survey is a poll of members of BSR” and “not a statement about BSR’s organizational strategy” and they helpfully highlight their most recent annual report which explains what is required to accelerate progress.  This four-part strategy is indeed very impressive.  But as companies like Barclays, BP, Enron, HSBC, News Corp, Siemens and many others have discovered, it is the strategy and value in action that matters far more than the written policies and codes, which indeed have often been very good. 

And we should remember that BSR is 20 years old and has had quite some time to influence how member organisations think and act. Strategy “in action” is the real strategy just as the values “in action” are the real values. 

This is not in any way a negative comment on BSR’s exemplary written strategy. Pillar 1 (“integrated business model”) speaks directly to the problem of CSR being a bolt on.  Pillar 2 (“financial markets that promote long-term value”) raises many of the issues that I have although I did not see any commitment about what the pension funds of BSR member companies will do.  Collectively, these funds are co-responsible – along with other important asset owners – for our dysfunctional investment system today.

And Pillar 3 (“new frontiers of collaboration”) is also critical to address the sectorial and systemic issues, which cannot be addressed one company at a time and to convert these wicked problems into business opportunities.  But I have some doubts about Pillar 4 (“empowered individuals, connected communities”). Not because empowered individuals cannot make a difference but because we have been talking about the need for the empowered citizen for a very long time and the cavalry of the ethical consumer looks no nearer than it has been for many years.

Investor Interest: We Are What We Own

Of course, this in part also reflects the lack of corporate investment in fostering discerning consumers, especially when it comes to financial products and services.  A recent study by Yale, for example, about public attitudes to climate change covered voting attitudes and consumer preferences but had no mention of investor interests – the awareness that “we are what we own” is, in would seem, still very rudimentary.

In addition, my colleagues at BSR also felt that the article “conflates a few different data points from our survey”.

For example, with the question Which of the following are the most important actions companies should take to improve public trust in business? they argue that although “aligning lobbying efforts and CSR/sustainability goals” comes at the bottom, the question is not about strategic priorities but about how to build public trust.

They also highlight that in response to the question: When you think about the focus of your company’s [organization’s] corporate social responsibility (CSR)/sustainability efforts in the next 12 months, how much of a priority are each of the following issues?  “Public policy frameworks promoting sustainability” comes in the middle, at 53 percent. 

Business Leadership: Aligning Lobbying with CSR

To their credit, they also acknowledge that this question is not specifically about alignment of lobbying and CSR and is, to my mind, more of a “wish list” of things that respondents would like to see in the world. Moreover, there is not much differentiation between many of the factors aside from human rights at the top and poverty reduction at the bottom.

In my experience, often the best way to identify what people are really thinking – and most important, really doing – is to ask the questions obliquely. 

So the value of business leadership (and the next one which asks In which three of the following areas is business showing the greatest leadership today?) is in a consistently low prioritization of alignment of lobbying goals with sustainability ones. This also accords well with what independent commentators report based on their practical and research experience.  Indeed, some companies have formally acknowledged this – for example by reviewing their membership of the US Chamber of Commerce over the climate change debate.  

Finally, BSR colleagues volunteer a data point that bolsters our shared argument about the importance of business integration of sustainability: “In your opinion, which two of the following stand out as the MOST important leadership challenges for businesses today?”  The top response here is “integration of sustainability into core business functions” (62%).  Interestingly, “public advocacy for policies that promote sustainability” comes at the bottom, even below “developing enduring partnerships with non-traditional partners”.

BSR: Leading the Future

To my mind, the conclusion is clear.

From the very valuable experience of organisations like BSR – and this is not only a challenge for the U.S.– we know what we need to do and where there is deep-rooted immunity to change.  The big question: do critical masses of BSR member corporations want to be the tipping point for how the U.S. corporate/financial system operates?

And in terms of practical next steps, being fully aware of how hard it is to really know the reality on the ground in other countries, and in light of BSR's commendable commitment to work with non-traditional partners, will BSR be willing to engage with informed U.S. commentators like the Centre for Political Accountability, National Resources Defense Council [NRDC], Change to Win and informed academics like Robert Reich, Lawrence Lessig and Lucien Bebchuk to find a consensus-driven, home-grown way out of our multi-faceted crisis?

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