IN TIMES OF
Corporate social responsibility, or CSR, is the act of running a business with an eye towards the social, environmental, and ethical impact the business’s activities will have.113 In the past, CSR focused on damage to the environment and ways in which a business could give back to its community. It was driven mostly by philanthropy – businesses gave money to support causes and to fuel clean up efforts when something went awry. Today, however, CSR has been expanded to include ethics, hiring processes, training, responsible purchasing, green solutions, and much more. As discussed earlier, no business exists in a vacuum, and while it is sometimes helpful to pretend that the contextual world surrounding it does not exist, a leader cannot afford to believe that the business does not impact on its context on multiple levels. Let us examine a business’s CSR in terms of social, environmental, and ethical responsibilities with an eye towards how a business handles these responsibilities in uncertain times.
A business’ social responsibility has changed over the years. In fact, the debate over what exactly a business is responsible for has changed. No longer is it obligated simply to the shareholders, employees, and others it directly affects. Now, many consider a business to have a responsibility to society as a whole.114
This is because, again, a business affects more actors than those who directly interact with it. It impacts the entire context in which it operates. One company’s actions can affect a community, a region, other businesses, and the entire industry of which it is a part. Today, leaders have to factor this into their decisions, and it all boils down to one single thought: create value for the business and the community as a whole.
Of course, this is easier said than done, and how one business goes about addressing its social responsibility is going to vary greatly from how other businesses do so. One thing, though, is not in question: businesses that shirk their social responsibility, in both times of crisis and stability, will be called out on it. Activist organizations, the government, the media, and other businesses do not hesitate to name and shame those that act irresponsibly.115 CSR has become a way of life for businesses, and those that do not give it priority are doomed to face the consequences.
Few businesses make the news for making an ethical choice, even in times of uncertainty when others are not. Instead, it is those that are unethical that make headlines.
Becoming sustainable is no longer merely a selling point. It is now a strong driving influence on the free economy. Because of this, businesses that are not seen as environmentally friendly are taking a major business risk.116 People no longer see the environment as something that is free for use. Instead, there is now a price on consuming natural resources, and as those resources become ever more scarce, that price will increase. In times of uncertainty, it is an easy fall back to start using natural resources that are easily available, but that comes at a price nowadays: a hit to the business’ reputation. That is a hit that many simply cannot afford to take. The risk of losing a good percentage of customer base due to outrage over poor environmental stewardship is never worth the short-term benefits.
Being environmentally responsible often comes in two parts. The first is similar to the Hippocratic Oath taken by medical professionals: “First, do no harm.” Businesses, even during times of uncertainty, should operate in such a way that they do not harm the environment. Of course, most people realize that this is a very, very difficult thing to do, and many resort to the next best thing: leaving as small a footprint on the world as possible.
The second part of being environmentally responsible is cleaning up any mess that a business may make. While most businesses work to make certain they do not end up in a PR nightmare like the one Exxon-Mobil went through when its ship spilled oil into the ocean, there is always that chance that something similar will happen. This is one area in which businesses must have a contingency plan in place. That, at the very least, shows a willingness to be environmentally responsible.
While it’s relatively easy to nail down the social and environmental responsibilities of a business and even measure them, it is somewhat more difficult to say what exactly a business’ ethical responsibilities are. Generally, we view ethics as a photonegative: it is much easier to see when someone is not being ethical than it is to see when they are being ethical. Few businesses make the news for making an ethical choice, even in times of uncertainty when others are not. Instead, it is those that are unethical that make headlines.
Fortunately, many businesses are now creating and implementing ethical business standards, reporting habits, and transparency in their dealings.117 Many large businesses are now voluntarily inviting external ethics organizations to examine their business practices and assist them in correcting any issues that are found.
While it may be the hardest to point out and to implement, being ethically responsible should be the first of the three CSR areas on which a business focuses. That’s because when one is ethically responsible, being socially and environmentally responsible often requires little extra work.
The concept of technoethics is not as new as many people think. The term was coined in 1977 by Mario Bunge, a philosopher who saw the need to lay out principles and guidelines for the use of technology.118 Today, this has become an interdisciplinary area that helps guide businesses, governments, and individuals in the ethical use of technology. One of the biggest areas of technoethics involves privacy. Where does an individual’s right to privacy begin? If a person posts something to the internet via social media, is it instantly assumed to be public even if they allow restricted access to it? Do business leaders have the right to scour the internet for every little bit of dirt on a potential or current employee? Obviously, people do not want every detail of their lives put online, but it is much harder to see the line today when so many people voluntarily share this information.
While it may be the hardest to point out and to implement, being ethically responsible should be the first of the three CSR areas on which a business focuses.
Then there are questions pertaining to artificial intelligence, genetic manipulation, digital terrorism, and much more. In times of uncertainty, it is very easy to start committing what many would see as ethical violations via technology. In the US, this has already happened – the Patriot Act allowed the government to use technology to obtain information about individuals with little regard to their privacy, and the same debate is trending within the EU. Hackers do such things every day, some to steal sensitive information, others simply to see if they can. Even individuals may commit acts that are ethically questionable, such as downloading music illegally, or creating fake Facebook profiles in an attempt to gain access to information posted by ex partners.
Somewhere, lines must be drawn. Technoethics attempts to do this by examining how technology is used and where that use will take us. But it is more than simply discussing whether or not a technology should be used – that question is much too broad, and there are no good answers. Instead, technoethics looks at more focused uses of technology. The overall idea is that technology itself is a neutral concept; it is how that technology is used in specific situations, especially in uncertain times when the urge to abuse it is so strong, that we must question.
Technology itself is a neutral concept; it is how that technology is used in specific situations, especially in uncertain times when the urge to abuse it is so strong, that we must question.
ETHICS AND UNCERTAINTY
The conversation regarding CSR during times of stability is a much easier one to have than discussing ethics and responsibility during times of uncertainty. When a business is on the edge of failure, is it acceptable for that business to be less socially responsible in the sense that they may fund fewer community initiatives, scholarships, and so on? Is it acceptable for the business to opt to continue using manufacturing techniques that leave a carbon footprint when switching to a more expensive method would force the business into debt? These questions are why CSR continues to be an important factor in today’s world.
However, there is no gray area when it comes to practising CSR. Leaders who fail to take ethical, environmental, and social factors into consideration while leading their businesses will face a severe backlash, sometimes to the extent that the business cannot recover.
Uncertain times place leaders in stressful situations. They may face challenges to their leadership, as can be seen in the fact that CEOs serve only about five years on average. They may find it difficult to implement innovative solutions and to even motivate their employees to be innovative. During these times, they may have to work to reorganize their business and, no matter what, they must always take social, ethical and environmental factors into consideration.
However, even though they may be dealing with uncertainty and chaos, strong leaders can successfully lead their businesses to stability and profitability without leaving ethics at the door. The most successful businesses in the world do this on a regular basis. After all, the only certainty in life is change, not failure.
The model on page 222 is used by one of Europe’s largest private equity companies to assess potential investments as well as develop existing portfolio companies. The perspectives are both social impact in terms of human rights and ethics, and environmental impact in products, services and operations. Based on this, an investor or corporate management team can identify potential hazards in an investment case through mapping the level of social and environmental impact. Also, they can easily map a trajectory and create a corporate plan for development in these areas.
As with many models, the extremes (corners) of the model are the ones where the most potential impact can be seen going forward. Interesting also is that much of this progress can be achieved through the use of technology.
The “do not invest” corner is of course a very uncertain and complex area to invest. Often it is easy to just say no, but with the right due diligence, price level of the acquisition and management experience, this is a case where a sustainability-conscious investor can make the most impact.
The “disruptive technologies” corner is different in the sense that the understanding and awareness is high, but the company or industry lacks the necessary means and technologies to improve their environmental impact. Here, a good technological understanding is essential to make the case.
The “awareness and cultural change” corner is the complete opposite. Here the environmental understanding is good, and there are also technical capabilities to handle the impact. From a social perspective, a lot has to be done, and here it is more of a challenge to change the mindset of the entire organization.
Being in the “continuous improvement” corner is of course somewhat of a luxury. Although this position is considered a potential entry barrier, the company can not sit back and relax. The entire business collective is moving in their direction and, as a leader in the field, it is important to stay ahead of the crowd.