Forty-five per cent of the 250 largest companies now produce
a report of some kind on their social and environmental performance.
This is good news. Or is it? Looked at the other way, the majority of
the world’s largest companies do not report on their performance in
these areas at all.
The debate on how best to encourage
the laggards to begin doing so usually revolves around regulation
versus the voluntary approach, with companies opposing regulation. But
it is now taking an interesting twist. There are early signs that some
large companies known for their CSR activity could be willing to
support limited regulation in this area as part of the general debate
on governance. For example, several companies, among them a bank, an
oil company and a pharmaceuticals firm, contacted the office of the UK
MP responsible for the Company Responsibilities bill, to express their
interest in supporting the measure (EP4, issue 2, p3).
They are unlikely to be engaging in a mere public relations exercise.
It has dawned on them that a level playing field is desirable if they
are to derive the greatest benefit from their CSR programmes. As
standards rise, it is inevitable that the companies responsible for
raising them will want their competitors to operate to the same rules.
The direct costs of CSR good practice are a minor factor, mainly
because they are not particularly high. But without internationally
applied standards, bad practice will always drive out good. For
example, CSR policies can help a company in the extractive industries
to win a licence to operate by minimizing social and environmental
impacts. But that licence may also literally be bought by a corrupt
competitor, leaving the socially responsible operator out in the cold.
In this situation, CSR brings no competitive advantage, but
disadvantages the company relative to an unscrupulous peer.
When enough companies in a sector find it is in their interest to have
high standards, they will begin lobbying for them. The ranks of those
calling for improved governance through global standards will
eventually be joined by companies themselves
