"If you're in a bad situation, don't worry, it'll change. If you're in a good situation, don't worry, it'll change."
-- John A. Simone Jr.
There is growing evidence that CSR as commonly practiced is not an effective use of corporate resources.
In a recent McKinsey poll of 391 CEO’s whose companies participate in the UN Global Compact, the CEO’s listed “competing strategic priorities” as the most significant barrier to implementing an integrated strategic approach to CSR. This was followed by:
- complexity of implementing their strategies across diverse business functions and divisions
- lack of recognition by financial markets
- differing definitions of CSR across regions and cultures
…companies aren’t using that tool [CSR] as well as they could. Executives doubt that their philanthropy programs fully meet their social goals or stakeholders’ expectations for them.
their corporate philanthropy programs are very or extremely effective at meeting social goals and stakeholder expectations. Their companies take a somewhat different approach than others do: their programs are more likely to address social and political trends relevant to the business and to be influenced by community and business needs. Executives…say that efforts are already more likely to involve collaboration with other companies. Finally, these companies are much likelier than others to say they are achieving any business goals they have set for their philanthropy programs in addition to social goals.
So, what’s happening here?
We are seeing a clear difference between companies that see CSR as a “tool” or one of many competing strategies and those that are embedding CSR priorities into the business. It is a story of commitment. Or, as Charlie Parker said, “If you don’t live it, it won’t come out your horn.”
Companies that aren’t “living it” are doing CSR for other reasons. Generally they fall into one of three categories: Compliance, Conformity or Cooperation. What these categories have in common is fragmented, frequently externally driven, adoption of CSR behavior.
Further, organizations that are “living it” frequently aren’t doing CSR at all. They are being sustainable and, at best, targeting abundance. By “being sustainable” I mean generating value for a wide range of stakeholders within the company and in the communities, regions and countries in which they operate.
This is a big difference. What the McKinsey polls point to is this: being the change you want to see in the world is good business. Doing CSR, while not a bad thing, as a strategy (competing with other strategies) is ineffective, inefficient and, basically, not good business.
Don’t get me wrong. Giving and philanthropy are good. These acts help people, communities and the environment, a lot. Doing philanthropy and CSR as a strategy is good. Being sustainable is better. Better return on investment, better use of resources, better, bigger impact.
Beyond strategy, being sustainable is a way of thinking, seeing and doing business. Being sustainable is living it and enjoying the value we create. Being sustainable is, simply, better business.
Tags: CEO's, Charlie Parker, Co-operation, Coherence, collaboration, Compliance, Conformity, Constellation, corporate philanthropy, csr, McKinsey, stakeholders, strategy, sustainability, UN Global Compact
“Sustainability” is not always sustainable. Simply, doing and describing what you do as sustainable does not make it so. For organizations (and us, personally!) to be sustainable in what we do, we have to be sustainable in who we are and how we see the world. This gives us our best shot at doing something that is actually going to get or generate sustainable results. In the following series of six posts I will introduce the six levels of engaging in sustainability: Compliance, Conformity, Cooperation, Collaboration, Coherence and Constellation. We use these at Interkannections to help our clients clarify their current goals around sustainability and map out their paths for deepening their practice and impact.
When we act at the Cooperation level our focus shifts to giving back and helping out. We engage in philanthropy and charitable giving/support of select causes because we’ve decided or believe it is the ”right” thing to do.
- Sustainability at this level focuses on a mix of internal and external drivers calling for “giving” and “helping out.”
- Example sustainability activities: Charitable giving, service days, volunteerism, targeted but disconnected internal and external CSR campaigns, employee-specific giving schemes, standards for suppliers, stated socially responsible principles and purpose.
- Being at Cooperation is about philanthropy. We feel a sense of responsibility to help and support causes of personal interest and meaning.
- What we see at this level is our capacity to do good, to help out and support social and environmental responsibility.
- What we are doing tends toward transactional giving and improvement. We help you. We help ourselves. We tend toward doing for vs. doing with.
- What we get from Cooperation is improved operational sustainability in targeted areas and the very real sense we are making a difference in the lives of the people and conservation efforts we choose to help.
- Remaining at Cooperation limits the effectiveness of the time, energy, financial and human resources we apply to socially responsible action and sustainable business. Activity gets confused with accomplishment.
From our research it is pretty clear that most organizations are currently operating around the Conformity and Cooperation levels. Further research by a partner in the US found that over 60% of the companies they surveyed were operating between Compliance and Cooperation. In terms of sustainability, we believe our greatest challenge and opportunity is moving beyond these levels because it is our thinking and behavior at these levels that has brought us to where we are today. Simply, Compliance, Conformity and Cooperation are showing themselves to be unsustainable.
Think about it. Sustainable is getting by-enough to continue to living. It means defining, targeting and ensuring a minimum. Drop below that minimum and we die–either slowly or in spectacularly apocalyptic fashion.
Then there’s the oxymoronic issue of sustainable development. Development, as currently practiced, is a linear process based on targets for growth. The paradigm shaping this practice is competitive, linear and sees growth as something that can continue indefinitely. “Development”, in the sense defined above, is unsustainable. Nothing lives forever. That includes Redwoods, the American automobile industry and George Burns.
Sustainable development also implies doing the minimum in the development process to maintain conditions favorable to development. If you’re mining minerals in a third world country you don’t need to make your workers wealthy, you need to keep them minimally healthy and maintaining community and ecological health is well off the radar. You just need to keep them working or find more workers needy enough to take their places. Doing so sustains the development process. Donating profits to UNICEF or some other NPO/NGO to be “socially responsible” makes little difference.
So, sustainability, asks us to do the minimum. Certainly many of us could get by with much less. We really could lower the bar on “enough” without engendering any suffering for our selves and our families. And, from what I see, I think we should. However, can we not also do more, much more, to generate value, create an abundant wellness, a world (inner and outer) in which we can all flourish?
Wouldn’t it be more interesting, engaging and exciting to focus on creating value for all constituents in the value web?
What would that look like? What would you be doing? Where should you start, NOW?
Great article over at worldchanging called: Enlightened Capitalism: Building a New Corporate Consciousness.
Rachel Botsman writes that for corporations to make the shift to new, truly sustainable ways of doing business they need to look at the best practices of companies like Timberland, Seventh Generation, Eileen Fisher, Patagonia and Stonyfield Farm. I would also add Burgerville in Portland OR to this list of sustainable business leaders.
She lists the following practices as key to making and maintaining the shift to sustainability:
- Abolishing the term or notion of “Corporate Social Responsibility”: Couldn’t agree more. The thinking behind CSR tends to create a separate culture of giving, donating and contributing to causes. It is often a band aid approach instead of a coherent, organization wide commitment to generating value.
- Shifting from linear to systems-based thinking: The world is neither linear nor solid. Everything is connected, constantly changing and affecting that around it. Markets are fluid and unpredictable. We, our communities and organizations are open systems. To understand them and their interactions requires systems thinking capacity and competence.
- Teaching employees new types of collaboration: Creativity and innovation emerge from the chaotic soup of interaction and interrelation. This requires unlikely and unconventional partnerships and communication. Co-opetition in place of competition.
- Showing respect for employees: Why, if everyone I speak with wants a Theory Y workplace, do we have so many Theory X organizations? People want empowering, life-enhancing relationships and work. Yet what we often create for each other are demotivating, controlling and dispiriting working conditions. Showing respect means finding a way to help employees live and work in fully engaged and healthy ways.
- Empowering employees by helping them to make a difference: Increased capacity for performance needs learning, development and sincere support. When people can see how to and actually do make a difference in or outside of work they grow in unpredictably wonderful ways.
- Setting goals that challenge the imagination: No waste! Try that one on for size.
- Using transparency to solve problems: It’s amazing how many problems remain problems simply because no one is willing to discuss them. Or, we just shut them out. Many problems are actually not problems at all. They’re dilemmas or polarities that need to be managed. Understanding that can free many of us from the dark traps our problem avoidance routines put us in.
Tags: Burgerville, capacity evolution, creativity, csr, Eileen Fisher, enlightened capitalism, innovation, Patagonia, Seventh Generation, Stonyfield Farm, sustainability, systems thinking, theory x, theory y
Attended the second Green Mondays event on, well, Monday. Thanks go to Laurence again for putting together a great event. We had two speakers: Paul Sands from Virgin Atlantic and Darrell Nelson from the Kisho Kurokawa Green Institute.
Paul described Virgin’s diverse approach to greening their business including updating their fleet to more fuel efficient planes, offices powered by renewable energy resources, leveraging the presence and power of their visionary founder, Richard Branson and, a crowd favorite, off-loading all of the empty champagne bottles consumed by passengers before take off!
The highlight of his presentation, though, was his report on the successful test flight of a biofueled airplane. Virgin Atlantic Airlines, in the face of considerable skepticism, demonstrated jets can fly using a jet fuel/biofuel mix. Virgin is now sharing their findings with other airlines who will also run such tests. Look out for more news on biofueled flights in the upcoming months as New Zealand Airways, Japan Airlines, Continental and others step up and tackle airline CO2 emissions issues.
Darrell’s talk focused on the need to raise managers capable of handling sustainability related issues in business. Although short on details, he outlined the Kisho Kurokawa Green Institute/Anaheim University online MBA program which is designed to give future managers a much needed foundation in sustainable approaches to doing business. He emphasized that “green business” is a fast growing field and opportunities are plentiful. It’s a good start and kudos to Anaheim University for putting together this program.
Attended a symposium at the United Nations University in Tokyo as a prelude to the G8 summit in Hokkaido. It focused on a number of differently related topics on climate change. Featured speakers included Jim Hansen, the NASA scientist responsible for sounding the initial alarm around climate change, a thoroughly entertaining and informative Gwyn Prins from the LSE, Bill McKibben, environmentalist author, and a host of other people with different takes on reducing CO2.
Though only present for the first half, my reflections and rationale for missing the second half are below:
I passed on the second half because a large number of the presentations focused on reducing CO2 output. “Fighting” global warming or focussing on carbon emissions reduction and offsets is simply a waste of time, money and energy. Focusing on shrinking our “carbon footprints”, trading emissions and setting disconnected CO2 emissions reduction goals is, to quote the Godfather of Soul “Talkin’ loud…but we ain’t sayin’ nothin’.”
To have any meaningful effect on this issue, we’ve got to look at and change the fundamental behaviors contributing to global warming, rises in oil costs, food shortages and renewed interest in coal and nuclear energy. We also need to understand the meaning of that behavior for the long-term (100+ years) sustainability of human civilization. Less than our survival, a focus on flourishing, I believe, is in order.
The behavior I’m referring to includes individual, family, community, regional and national habits of energy consumption, corporate research, development and production, policy setting and cross-industry, cross-sector co-operation and collaboration. Underlying this behavior is a desire to live well, make money and an unhealthy penchant for short-term “green” action that hurts much more than it helps (oil palm plantation expansion into rain forests is but one example).
The current challenge we are facing is: How can we flourish (live well) while reducing demands for unhealthy energy sources like coal and oil? Linked to this challenge is the, even greater, challenge of integrating our lives with the eco-systemic dynamics that support us and take the Cradle to Cradle approach of creating 0 waste and ongoing, creative recycling.
This does not mean falling backward in some painful Luddite breakfall. It means learning to roll smoothly forward, land on our feet and co-create communities, businesses and economies that are flexible, adaptable and focused on flourishing within the eco-systems from which we emerged and in which we are inextricably embedded.
This means we become eco-centric innovators and entrepreneurs developing technologies, products and services that serve eco-logical and eco-nomic health. This is not an issue of being liberal or conservative, capitalist or socialist, hawkish or dovish, monotheistic, polytheistic or atheistic, Muslim, Wiccan, Christian, Hindi or Buddhist, “dark green”, “bright green”, brown or blue. It is about understanding our fundamental relationships with others and the world around us and intending benefit for all.
The Buddhists call it “right intention.” From right intention springs right action.
What is your intention and, more importantly, what are you doing?
Attended a great event last night called Green Mondays. Put together by Laurence Smith, it was an excellent night for networking with green-minded and interesting individuals. Thanks to Jon Maier from ERM for a relatively light hearted look at some of the environmental risk conundrums in Japan. We’ve got over fifty members on our Ning site now. If you’re interested, come join us or start your own Green Mondays networking gig.
This is some of the best news I’ve heard in a long time around sustainability. Good news?! Yep. Read the article at B-net in which representatives from Wal-Mart & Whole Foods speak about the realities of CSR. Thanks to Lance for pointing it out.
“If Wal-Mart is not a green company, then Whole Foods is not a green company. We do a lot of green things, and we have green intentions, but we don’t believe that we are, and we try not to say that we are.”
Sustainability, Besancon added, creates a great deal of tension between the three legs of the “triple bottom line”: People, planet, and profits. Replacing plastic bags, which cost a penny each, with paper bags, which cost as much as 17 cents each, is not a zero-sum move.
These men and many other men and women like them are running into the systemic realities of sustainability. There are no zero sum, linear and tidy solutions. And, more importantly, there is a lot of tension between the eco-logic and the eco-nomic. Our economic systems are based on perceptions, assumptions and thinking that are simply deeply misaligned with eco-systemic processes. Throw in a big helping of “green” oughts and it becomes very hard to see what is, much less what to do. It takes a lot more than unilateral actions to intervene in systemic dynamics. In human systems, in particular, we’re talking about changing the actions of millions of self-interested systemic constituents (people).
There are two other key points in this pithy little article:
- There is potential for retailers and consumers to work together to “push for more transparency in the supply chain.” This is where, with a little facilitation, there is potential for some very powerful and meaningful synergy.
- In the wake of Katrina it was corporations and other organizations that were most responsive and able to help. We are just beginning to tap the potential of non-governmental entities to contribute to social welfare and sustainable interventions.
Wal-Mart and Whole Foods wisely acknowledged they have a long way to go before they believe they are approaching sustainability in their operations. This is good news. It shows they know where they would like to go and that there is organizational awareness of the gap that needs to be closed. They are beginning to show signs of coherence in their approach to sustainability. The limitations of partnership are becoming clear.
What will help them and others make the jump is an evolution in the capacity of key organizational members (and eventually the organization as a whole) to see the world in its systemic and inter-systemic complexity and let what they see guide their actions. That is when the boundaries begin to blur between corporate and communal, between self and system and when our interconnectedness ceases to confound.
To appropriate the tag line of the X-Files: The truth is out there (and in there). We simply need the capacity to see it.
Ok, it’s time to take the Stage of Engagement challenge. Where do you rate your self, your organization, community, government and other institutions with which you are involved. Don’t feel like any of the categories below hit the nail on the head? Suggest a new one. Find one that fits? Let us know. Have fun!
- Compliance: We do what we have to do until no one is watching. Rules are made to be broken. Things aren’t that bad for me/us at the moment, so why worry? This green, sustainability clap trap is killing business-let’s make money!
- Conformity: We need to become more sustainable because that’s what the media and experts say. Look at what other people and organizations are doing. We’d better fall in line. “They” say its the right thing to do.
- Co-operation: We have to do what is right. I/We know what’s right so follow us! We must fight poverty/global warming/hunger/whaling/AIDS, etc. This is a good cause and look at the way they manage their donations. We need to strategically support causes that meet our criteria for support. We’ve set aside this amount of money to spend on sustainable/socially responsible/green causes so let’s analyze what is the best way to invest our funds.
- Coherence: We have to re-organize, re-design, re-engineer the way we live/operate do business. We have to organize around socially responsible/sustainable principles and act with integrity and coherence around these principles. Sustainably incoherent action is intolerable and makes no sense. Half-way, half-baked sustainable is not sustainable.
- Constellation: Isolated action is not enough. Issues are systemic with multiple causes and feedback loops. The only way out of this mess is create constellations of sustainable/social responsible thinking and action that act to deeply influence embedded system dynamics. If you want to fight poverty you must simultaneously target poverty, population, local and global economic dynamics, individual and cultural mindsets, education, governmental policy and corporate resource allocation…to name a few.
The mindset behind Really Strategic CSR is an eco-centric one. Eco-logical and eco-nomical, the eco-centric mind seeks solutions that just don’t benefit they generate.
From a permaculture perspective this is called obtaining a yield. To get a yield from your efforts you have to understand the patterns and processes in place that provide that yield. The key, then, is to align your efforts and resources in a way that best partners with those patterns and processes for long-term sustainability. This also produces little or no waste.
As a corporation this means leaving a compliance mindset far behind. It also means moving beyond the trend of partnering with causes that thematically match your corporate endeavors.
Corporations need to make the leap of faith that at the root of CSR is the eco-centric mind. This means taking an sustainably integrated approach to governance, radically re-aligning processes and systems to the logic of the home: eco-logic. This is done in a way that maximizes short-term eco-nomic yield, preserving long-term eco-systemic support and creating eco-centric opportunities by developing new sustainable markets while revitalizing old ones.
Eco-nomy is, fundamentally the exchange of energy in the form of commodities, products, services and their derivatives. Eco-logy is the the way in which this energy moves, cycles and recycles through eco-systems. Where does long-term competitive advantage come from? From understanding and integrating the relationships between the two.
The greater the partnership, synergy and coherence between the eco-logic and the eco-nomic, the more powerful and profitable the business. However, first, you have to revise your definition of profit. It’s not short-term quarterly gains we’re looking at here. It’s the value of the business to the eco-systems in which it makes it’s home, lives and grows. The greater the value, the more profit that accrues.
To paraphrase the Pixies: where is your mind?