4. Sustainability, Inc.: the emergence of corporate social responsibility

Business pays attention to the "triple bottom line"

When the business community began to talk about sustainability in the early 1990s, environmentalists responded with a mixture of amusement and disbelief. To the skeptics, corporate commitments to sustainable development amounted to little more than a veneer, designed to appease a growing number of environmentally-literate consumers.

However, to dismiss corporate social responsibility (CSR) as just a marketing ploy would be wrong. Throughout the 1990s, the idea that corporations can have a social conscience while turning a profit gradually took root, and is now well established. Business leaders are beginning to look well beyond regulatory compliance, and to talk in terms of a "triple bottom line" --in which economic performance is assessed alongside environmental and social impacts.

Managers who are tempted by CSR as a means of polishing their corporate image are finding that it is getting harder to talk the talk without walking the walk. International programs like the Global Reporting Initiative set out in detail what indicators should be used when a company talks about its social and environmental performance. The European Union, meanwhile, is drafting its own policy setting out what CSR entails. There are even tentative plans for an international standard governing CSR, similar to ISO 14000.

Multinational corporations are clambering over one another to demonstrate their CSR credentials. For example, the 2002 World Economic Forum in New York saw 36 chief executives from giants like Coca Cola and Siemens sign a joint commitment to corporate citizenship, which places CSR squarely on the boardroom table. "The frameworks we adopt for being a responsible business must move beyond philanthropy and be integrated into core business strategy and practice," they insisted.

Words are, of course, cheap. A degree of skepticism is warranted when weighing the content of such sweeping commitments. For example, many corporate sustainability pledges contain get-out phrases such as "wherever possible" or "in the near future." Nevertheless, once a corporation has publicly committed itself to CSR, the genie is out of the bottle. To publicly renege on any of its stated principles would be bad publicity, to say the least.

Among the challenges for the next decade is to persuade skeptics within the business community that CSR makes good business sense. Business leaders not enthusiastic about CSR maintain that a company is obligated to its shareholders, and to no one else. A further challenge is to persuade the many thousands of small and medium-sized businesses around the world to follow the lead set by the multinationals. This will not be easy, since many small business managers regard CSR--with some justification--as a luxury they cannot afford. Nevertheless, a handful of minnows are demonstrating what can be done, and auditing schemes like the U.K.'s "GoodCorporation" have been established to help them on their way.