CSR, Philanthropy, Assurance and Other Insights From NY COMMIT! Forum

Earlier this month in New York, Future500 organized “leaders from the left to the right for an Unconvention to explore areas of conflict and potential common ground on energy, innovation, capitalism and sustainable prosperity.” It was done under the umbrella of COMMIT! Forum which took place this week.

This topic is, of course, a bit difficult to cover thoroughly in just two days, but nevertheless the conference, which was attended by many from the CSR community, generated some thought provoking discussions and debates, just like last year.

This week I will present three articles summarizing some of my reflections from the conference, starting today with three interesting insights I’ve taken away from the COMMIT! Forum:

Short- vs. long-term thinking

One of the major problems of the economic system is short-termism. In a discussion on the dual deficits (economic and environmental) and how to solve them, Robert F. Kennedy Jr. provided one of the clearest descriptions I’ve heard lately of the different paths these two approaches represent:

“In 100 percent of the cases, good environmental policy is identical to good economic policy. If we want to measure our economy (and this is how we ought to measure it), it should be based upon how it produces jobs, the dignity of jobs over the long term and how it preserves the value of the assets of our community. If, on the other hand, we do what the polluters have been urging us to do, which is to treat the planet as it were a business in liquidation, convert our natural resources to cash as quickly as possible, and have a few years of pollution-based prosperity - we can generate spontaneous cash, the illusion of a prosperous economy, and make a few people billionaires by impoverishing the rest of us. But our children are going to pay for it with nude landscapes, poor health and huge cleanup costs they will never be able to pay.”

The business case for assurance

CSR reporting was very dominant on the conference’s agenda. I learned from Ernst Ligteringen, Chief Executive of the GRI, that Chinese companies have already published 1,000 CSR reports to date, reminding me of how little we still know about the progress of CSR in China.

A couple of other interesting lessons came up in a workshop that was focusing on assurance. While reporting is quickly becoming the norm for large companies worldwide, assurance seems to be the next step. Just like with reporting, it looks like many companies evaluate assurance through the lens of value, which actually makes a lot of sense as long as it’s a voluntary process. The good news is that a growing number of companies show the (and tell) the business case for assurance.

The participants agreed that assurance can be an effective learning tool. Michael Jacobson, Director of CR at Intel, shared Intel’s realization of the value of assurance, which helped the company understand its weaknesses and strengths. Another example from UPS was of product innovation that was derived from the assurance process.

It was interesting to see that the business case for assurance is focused, at the moment, on internal drivers and less on external ones. In other words, there is no real pressure from stakeholders on companies to audit their reports. Apparently the lack of such pressure will cause full adoption of assurance to be a relatively long process, but in the meantime, the internal drivers will ensure that it will continue to steadily develop and become a more integral part of CSR reporting.

CSR = philanthropy

A couple of months ago, I wrote here about the different stages of CSR, basically dividing it into philanthropy, good citizenship and strategic CSR (for example, shared value). At this conference, I saw and heard many stories of companies that are involved with good citizenship and even strategic CSR, but it looks like too many companies are still, at least in their perception of CSR, at stage one, i.e. philanthropy. In other words, many companies still work to take resources from the business and deploy them to do worthy social work instead of “creating economic value by creating a societal value,” as Michael Porter called it.

The best examples for this approach came from a c-suite panel that took place at the NYSE on the second day of the conference. Eikmet Ersek, CEO of Western Union, told the audience how his company is working to help millions of children who have no access to school worldwide. Duncan Niederauer, CEO of NYSE Euronext shared how they help veterans compete in the job market and find jobs. The last example came from Jeffrey Joerres, CEO of Manpower, who mentioned how his company helped build schools in areas in India that were hit by the tsunami.

It’s not that these companies are not involved in other CSR initiatives, but the fact that these stories came up in a discussion that was meant to focus on “how leading CEOs set strategy, make trade-offs, and measure the ROI of CR” indicates the dominance of philanthropy in the conversation about CSR, at least in the c-suite.

[Image credit: The COMMIT! Forum]

Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and the New School, teaching courses in green business, sustainable design and new product development.