It’s Our Time: The Three Things CSR Can Do to Help CEOs Keep Their Promise
The business world is abuzz with the announcement from a top association of America’s chief executive officers, that it is “modernizing its principles on the role of the corporation.”
While the group, the Business Roundtable, has for decades argued that a corporation’s sole purpose is to maximize shareholder value, it stated last month that “it has become clear that this language on corporate purpose does not accurately describe the ways in which we and our fellow CEOs endeavor every day to create value for all our stakeholders, whose long-term interests are inseparable.” Instead, the group now says, corporations are responsible for delivering value to multiple stakeholders, including its workers, consumers and the environment itself.
Executives focused on corporate social responsibility, or CSR, have long tried to insert their work into the shareholder value paradigm, arguing that looking beyond the bottom line actually increases a company’s worth. But the Business Roundtable announcement suggests that CSR teams may no longer need to mold their efforts into a triple bottom line argument to get executives’ attention. That means they can focus on delivering on the promise of CSR.
Some skeptics have cautioned that the Business Roundtable’s shift in focus is mere symbolism. Companies will need to demonstrate their commitment to all stakeholders by acting. Here are three ways CSR departments can start to do that:
Be honest—it’s not all perfect. I have been advising companies on CSR reporting and communications and studying their work for 15 years and it’s always been about the positive message. There’s nothing wrong with promoting successes and companies should continue to do that, but this is a field where success demands transparency and openness. If companies want to maximize value for all stakeholders, they’re going to have to get better at admitting where they’re falling short—that way, they open themselves up to solutions and partnerships that can help them better deliver on their promises.
Tackle all the issues—even the most stubborn ones. With the evolution of materiality in CSR reporting, companies have gotten better at identifying environmental and social issues that they’re best placed to address. But there are some issues that never (or rarely) make it into CSR reports no matter how progressive the company is. Take, for example, executive compensation. As The New York Times points out, there was no mention in the CEOs’ statement about the fact that “the 100 highest-paid chief executives get paid 254 times the salary of an employee receiving the median pay at their company.” With concerns about income inequality still raging, particularly as the 2020 Presidential election heats up, executive compensation is the type of issue that the CSR department could help companies manage in a way that promotes value creation for all stakeholders.
Create a standardized social impact reporting framework. Standardized financial reporting has helped Wall Street deliver on its decades-long promise to maximize shareholder value. But if the new norm is creating value for all stakeholders, there needs to be a way to measure and report companies’ success at doing that. The social impact measurement and reporting field is complicated and haphazard. However, mechanisms exist to help companies and the social sector rally around social impact common metrics. One such effort is the Impact Genome Project (IGP), curated by Mission Measurement. The standardized social outcomes data and common language that the IGP develops for a range of social issues could provide a framework for social impact reporting from companies.