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CSR Hits Limit, Report Concludes

2004-06-24 

Gearing Up, a new SustainAbility report launched on 24 June in New York at the United Nations Global Compact Leaders Summit, concludes that despite achieving impressive momentum the corporate responsibility (CR) movement is bumping up against real limits.  Some responsible businesses have scratched the surface of global issues like climate change and HIV/AIDS, but just as many work to maintain the status quo.  The efforts of business, in combination with government and civil society, are quite simply being outpaced by the problems.  It’s time for change.
 
SustainAbility’s report – subtitled From corporate responsibility to good governance and scalable solutions – concludes that the CR movement is constrained by too narrow a focus and the lack of appropriate links to wider global, regional and national governance frameworks.  Where links between companies and government do exist, they are often dominated by regressive lobbying – the automotive industry lobbying against effective action on climate change, for example, or fast food companies lobbying to slow controls on their industry.   As such, industry or corporate public affairs activities are often at odds with the declared CR initiatives of the same business.
 
Gearing Up is an insightful assessment of business progress by people who work with business.  On climate change, the report notes that a few companies have made significant cuts in CO2 emissions, but globally emissions have increased 8.9% since 1990, against a 60% reduction target. On the health front, some companies are helping to fight HIV/AIDS by providing anti-retrovirals to their employees.  Yet in the poorest countries, less than 10% of the six million people who need such drugs currently get them.  Too often, it’s a case of too little, too late.
 
In order to make real progress, and reverse the unfolding backlash against globalization, the authors call on Global Compact participants and other leading companies to help drive system-level change. Business is generally encouraged to stay out of politics, but the challenge business leaders face is increasingly political.  "Corporate responsibility has the potential to bring about positive change on a much larger scale", agrees Georg Kell, Executive Head of the Global Compact.  "But to get there, the CR movement will need to focus on two things simultaneously: achieving critical mass across all industry sectors, and connecting private actions with public policy efforts so that root causes of problems are tackled.  CR cannot operate in isolation any longer."
 
To make these connections in a legitimate way, companies must be more transparent and consistent in their public policy positions – and they will need to involve other interested parties.  The report, which assesses case studies on climate change, HIV/AIDS, chronic diseases and corruption, encourages business leaders to:

-  Increase transparency and demonstrate real progress in integrating CR into core business operations
-  Work alongside civil society and governments in ‘progressive alliances’ to achieve public policy changes that directly address social and environmental challenges
-  Champion policies that ensure more responsible forms of globalization.

John Elkington, Chair of SustainAbility, says, “It’s uncomfortable, but the corporate responsibility movement stands at a watershed.  Recent corporate scandals have forced regulators and investors to focus back on basic issues of financial integrity.  That’s a problem.  If we want the benefits of globalization, business leaders must align their companies’ lobbying with their corporate responsibility activities.  They need to help governments to act courageously in such areas as climate change, corruption and HIV/AIDS.”
 
NOTES TO EDITORS
 
Founded in 1987, SustainAbility (www.sustainability.com) is the world’s leading specialist consultancy on business strategy, corporate responsibility and sustainable development.
 
The Global Compact is a voluntary corporate responsibility initiative of UN Secretary-General Kofi Annan, which aims to mainstream ten human rights, labour, environmental and anti-corruption principles in business activities around the world and to catalyse actions in support of UN goals. 
 
Please click here to download a PDF version of the report.