CSR’s Global Surge

The days when companies could escape public scrutiny of their activities overseas are long gone. Today, corporations operating global supply chains face a difficult question: how to ensure their commitment to corporate social responsibility (CSR) isn’t diluted by distance.

The consequences of failing to adequately address this challenge were driven home for many Canadians by the tragic collapse of a garment factory in Bangladesh that had ties to Canadian companies. Public reactions to that horrific event testify to the higher expectations for corporate behaviour that have become entrenched worldwide. Whether in response to new government standards, public pressure, or enlightened self-interest, increasing numbers of companies are taking responsibility for improving the working conditions of their employees as well as those of their suppliers.  To better understand how CSR arrived at this point and where it goes from here, OpenCanada asked Hershell Ezrin, distinguished visiting professor at the Ted Rogers School of Management at Ryerson University, for his perspective on CSR’s global surge.

What major changes have occurred over the past decade in terms of international CSR standards?

In looking at CSR’s evolution over the past decade, there are a couple of key perspectives that I would like to flag. The first is that CSR is a constantly evolving concept, which is a healthy development because companies are operating in unique and complex environments. Recognition that one size cannot fit all is a positive development. The second is that companies increasingly understand their own role in the creation, implementation, and adoption of CSR standards, and appreciate that while government’s involvement is both important and desirable, government cannot be expected to deliver all the answers and support in managing the risks.

The biggest change with respect to international CSR standards I see is how the role and position of voluntary international CSR codes standards has become widely recognized as a key component in any effective public policy or business approach intended to address the social, environmental, and economic impacts of business. In the past, there were many doubters and critics regarding the value of voluntary codes and standards (and some still question whether CSR standards effectively serve the societal interests they purport to serve), but I see much less of that challenge to CSR today, and much more embracing of them as valued parts of the global CSR architecture.  This doesn’t mean that there can’t be significant and valuable criticism of any particular code or standard, especially during development, and in the early stages of implementation, as everyone becomes more familiar with the code or standard’s particular features and challenges. For the future, I see a certain amount of merging and “shake out” taking place and of course new codes or standards to address new issues.

How do you think attitudes toward CSR in the business community are likely to evolve over the next decade?

I remain heartened by the continuing growth, starting a decade ago, in the number of Canadian companies who report either in AGM or stand alone reports about their CSR practices. The concept of CSR and its role in the day-to-day running of businesses is increasingly becoming “the norm.” Transparency and accountability and stakeholder engagement in all that corporations do is the way things are going. Indeed, the way I see it, it’s becoming the norm no matter whether you are an organization in the public, private, or civil society sector.

Increasingly, the investment community is recognizing that tracking the social, environmental, and economic impacts of a company can be a good indicator of long- term good governance practices, and companies are taking notice.

I also recognize greater involvement, although uneven, by developing nations in the CSR area. I see a move toward meaningful CSR reporting, using standardized metrics to allow useful comparisons, becoming mandatory business practices. International codes and standards and universal principles will continue to be especially valuable in developing country contexts, where the domestic governance structure may be especially weak or compromised.

Do you think Canada could be doing more to further the development of international CSR standards?

In the past, a partnership of public, private, and civil society interests have banded together here in Canada to play leadership roles in the development of international standards. That’s what we saw with the ISO 26000 social responsibility standard that started with a major push from Canada, and the Kimberley Process.

We are still seeing leadership from the Canadian private and civil society sectors, but now government is often the last on the bandwagon. This is what has happened with the development of the Canadian version of the U.S. “Dodd Frank” revenue disclosure rules, which started with the mining sector and transparency NGOs getting together to replicate the standards emerging elsewhere, and then the federal government belatedly agreeing to implement them into law. The Mining Association of Canada Towards Sustainable Mining standards, and the Prospectors and Developers Association’s e3 plus approach are both quite innovative and are likely to influence mining standards internationally and in other jurisdictions, so this is an example of private sector Canadian leadership.

What can Canadian companies do to ensure socially responsible practices at all points in their supply chains?

The tragic Joe Fresh/Loblaws/Bangladesh situation has shone the spotlight on the need for and value of rigorous, comprehensive, and effective supply chain CSR codes and standards of conduct to assist workers in Asian, African, and Latin American countries.

There are many more things that need to be done to improve the situations of workers in countries like India such as addressing the corruption problem, and improving governance capacity practices, and Canadian firms, NGOs, and government are attempting to help in this regard. The key will be for groups to work together in establishing standards; individual corporate efforts will not be successful for obvious competitive reasons.

How would you characterize the business community’s interactions with global targets for development like the MDGs?

I find the MDGs to be very useful for creating targets, but on a day-to-day basis, we in business tend to get pushed to focus on the short term. The real challenge will be to convert those big MDG targets into a more particularized, granular, and incentivized institutional structure so that business executives are stimulated to factor the sort of environmental, social, and economic impacts embedded in the MDG goals into their day-to-day decision making.

Hershell Ezrin is leading a five part speaker series this fall hosted by The Ryerson University Institute for the Study of Corporate Social Responsibility.