5 Reasons to Move Corporate Responsibility Out of the CR Department

By Elizabeth Dove

Recently, Patagonia announced it was shutting down its sustainability department. Instead, the outdoor clothing and gear manufacturer is taking the responsibilities for sustainability to the entire company through a decentralized approach. Spokespeople for the company have said that management could see the limitations of a sustainability department framework with respect to involving the entire company in having positive impact on the planet.

Through the presentations at the Nov. 26 CBSR Summit in Toronto, a number of smart business arguments emerged about making sure corporate responsibility (CR) gets out of the CR (or CSR or Sustainability or ESG or … ) department and into other parts of the company. They just might start other businesses noodling about the value of following Patagonia’s example of shutting down the department altogether.

1. Involvement in CSR mandates creates happier employees: As illustrated through presentations by Tangerine and its innovative partner Nudge Rewards, as well as Accenture and Deloitte, employees love to be meaningfully involved in their company’s citizenship through volunteering. In fact 71 percent of employees say they are interested, but only 12% percent of them are actively aware and involved in corporate social responsibility (CSR) programs, signaling a gap in motivating communication. Getting communication and employee volunteer engagement right is proven to create huge business value, according to Janelle St. Omer of Volunteer Canada, including: increased retention, improved recruitment and strengthened relationships between employees. In fact, for every employee involved in the company CR commitments, $2,400 in value is created through decreasing turnover costs and increasing engagement.

2. Investors are watching: Before they even invest, today’s savvy investors are watching the way your company conducts itself. From supply chain management to diversity policies to carbon footprint, company responsibility performance is being measured through reputable sustainability indices, internal sustainability reporting and breaking news – good and bad – all of which reveal how a company walks the talk that is stewarded by the CR department. According to Heather Lang of Sustainalytics, investors are most interested in companies with the long view, those that demonstrate awareness of key environmental, social and governance (ESG) risks they are facing and related efforts to mitigate them.

3. Resources to report possibly outweigh resources to support: It’s a balance companies need to reflect upon. Because the summit presentations on reporting would seem to indicate enormous energies going into CR reports -- wildly varied in their comprehensiveness, slicing the data in a variety of directions and swinging back again to a trend of including stories. This isn’t to say that reporting isn’t necessary and important (if not widely read) by showing progress over the short and long term, creating accountability and goals for progress. Not at all. But I worry for companies for whom corporate responsibility is more of a data capture exercise than resourced efforts to innovate and motivate the entire company to act more boldly to create a positive social and environmental legacy while building business value.

4. Ensure you don’t end up in court: The United Nations Guiding Principles on Business and Human Rights (UNGP) have raised the responsibility stakes to new levels -- and most companies aren’t even aware of their new legal responsibilities, says Yousuf Aftab of Enodo Rights. Formalized in 2011, the UNGP (also known as the Ruggie Principles) compel companies to put a system in place that identifies human rights issues that may arise and reacts. They create a more precise lens for testing, in court, rights, causation and proportionality. No longer considered a ‘soft-law’ without teeth, Aftab gave several recent examples of courts taking companies to task for claiming to be serious about human rights but failing to have a system in place to identify human rights issues and react as per the UNGP. Such a system cannot logically be the responsibility of a single department but requires an entire company to be vigilant in the identify and react process.

5. Chances are the public does not care if you disappear: According to Femke de Man of Globescan, a recent study shows that 73 percent of brands could disappear and consumers wouldn’t care. Philanthrophy isn’t making companies distinct and certainly isn’t making up for bad behavior -- trust in business is at its lowest ever, according to de Man. This shouldn’t shock anyone, as many companies operate as if transparency is still in their control -- leaving the “doing good” part of doing well annexed in the CR department and displaying noticeable say-do gap. Your company doesn’t pass the smell test to consumers if you sponsor programs for street kids while failing to pay retail employees a living wage. The commitment to the common good has to be bold, authentic and visible to get stand out stature and ensure the wary public who want something to believe in become loyal customers that stand by your company.

While few companies are in a position of responsibility evolution where shuttering the CR department makes sense, the morale, investor relations, legal and reputation arguments for embedding responsibility throughout the company are impossible to ignore.

Elizabeth Dove is a specialist in strategically engaging the public, companies and government on sustainability and social change. She has worked as senior staff and consultant for initiatives that support the arts, child welfare, public health and particularly international development. Passionate about the power of collaboration, she seeks out projects that bring together actors from different sectors to create value for their organizations and the broader community.  She is Senior Vice-President, Strategy at The Divinsky Group and an Associate at Open Spaces Learning, a Canadian change management firm helping companies realize business and social impact. Twitter: @EDove5 @openspaceslearn