Big Country, Small Steps
Taking a critical look at the last decade of corporate social responsibility in Canada
Let’s start with a brainteaser: Define corporate social responsibility. Does it include sports sponsorship, as Air Canada indicated when it cited its CSR policy and admonished the NHL for not taking sufficient action against hockey violence? Is it building schools in Africa, as the Canadian mining firm Banro Corp. has done in the Democratic Republic of Congo? Encouraging young Quebecers not to drop out of school, which the Bank of Montreal has flagged as one of its CSR initiatives? Or having a zero tolerance policy for the use of child labour by suppliers, as the Hudson’s Bay Company says in its report? Is it all of these things or none of these things?
If you don’t have an answer, you are not alone. Despite an intense debate in Canada over the last decade and years of on-and-off discussions before that, there is no agreement on what corporate social responsibility entails or even on what it should be called. New labels crop up constantly: sustainable business, corporate citizenship, responsible business conduct, triple bottom line, voluntary corporate initiatives, total sustainable mining, E3 plus. Some emerge from business, government or advocacy groups trying to slant the concept in a favourable direction. Others come by way of consultants, advisors and gurus, who slap a new name on an old idea in order to make it their own. There is so much murk surrounding the issue that it’s difficult to see your way clear.
That’s the bad news. The good news is that few corporate executives still approvingly quote Milton Friedman’s dictum that the only social responsibility of business is to increase profits, at least not publicly. These days, companies are happy to boast when they hit the top rung of a CSR ranking or win an award for their program. There is growing agreement that business should integrate social, environmental and economic considerations into decision-making, and aspire to meet international standards and the expectations of society. Through the Global Reporting Initiative, there is even emerging consensus on which international standards to use and on how to report on the processes put in place to meet them.
It all sounds rather rosy until you dig a little deeper. The rankings are a good place to start. They generally give a deceptive impression of progress because most measure what processes have been put in place, rather than the impact of those processes. Having a process is an essential first step to improving corporate performance, but not proof that this has been done. Measuring actual impact – for example, whether the code of environmental conduct actually reduced a company’s carbon emissions or the code of ethics actually eliminated bribes – remains a work in progress, and a difficult feat. The convergence on how to report does not extend to what to report, even among the largest companies in the world. UNCTAD, the United Nations body that tracks such information, says 87 of the world’s top 100 transnational corporations report some information on their climate change policies, but they do not all report the same kind of information or to the same extent.
Advocacy groups have long sought to clear up the confusion by having governments set some clear rules and make corporate social responsibility mandatory. For business, more regulation remains an abomination. But it has started to creep in at the edges in some countries through requirements for stock exchange listings or in legislation aimed at solving a particular problem. A good example here is the Dodd-Frank Act in the U.S., which, although broadly aimed at fixing the problems that led to the recent financial crisis, also requires companies to ensure they are not using minerals that might be fuelling the conflict in the Democratic Republic of Congo.
The fight over whether there should be mandatory rules or voluntary guidelines has been central to the debate in Canada, which has focused on mining and petroleum companies. The Canadian Chamber of Commerce, which speaks for 192,000 companies, doesn’t like the term corporate social responsibility, preferring “responsible business” or “voluntary corporate initiatives” to underline the fact that this is optional behaviour by companies that have already met their legal obligations.