The Triple Bottom Line Blog

Here is a new study from IBM Global Business Services titled "Attaining sustainable growth through corporate social responsibility." Some of it simply confirms trends most of us in the "sustainability community" already recognize--for example, the fact that most companies are now beginning to look at corporate social responsibility initiatives as potential sources of business growth.

However, a couple of interesting observations from the report stuck out for me. Perhaps not surprisingly for a study from IBM, they relate to the information-management aspects of CSR.

1. Although the companies surveyed say they are pursuing CSR in large part because of demands from their customers, the great majority (76 percent) say they don't really understand what those customers expect or want. Most companies, it seems, relegate conversations about CSR to their sales, marketing, or PR people, which means that meaningful dialog about the topic doesn't generally involve line managers who have the power to make real changes in what the company does or how it does it.

It seems clear that this will have to change. After all, any company seriously interested in developing world-class customer service (for example) would make open dialog with customers about service expectations a high priority for its executives--and everyone, I think, understands this on some level. The same needs to be true when it comes to CSR.

2. When it comes to transparency, we in business tend to focus on the costs and the downsides: Can we really expose our inner workings to public scrutiny? Will transparency open us up to lawsuits or public embarrassment? Will it give our competitors a leg up? How expensive will it be to retool our IT systems to make it possible? etc. etc.

The IBM study suggests some interesting upsides for transparency--practical ways in which being open to outside scrutiny can actually reduce costs and lessen risks:

Increasingly, we believe that the degree to which a company is willing and able to open itself to stakeholder scrutiny will be a make or break factor in achieving CSR objectives. In fact, the company that invites more eyes on its operations can preempt problems that would otherwise become very expensive to solve.

To illustrate, the report discussses the challenges facing a manufacturing firm with thousands of suppliers around the world. (Hello, Nike.) How can it monitor and control the behavior of all the links in this vast supply chain? The temptation is to hunker down and go on the defensive, because the costs and complexities are simply so great. However, transparency offers a possible alternative:

But if a company clearly pledges to enforce standards, openly sets goals to improve upon its current abilities, and invites and enables stakeholders like NGOs to help monitor practices, then transparency not only relieves the business of some of the burden for monitoring, but strengthens relationships that were once adversial.

Obviously, this is easier said than done. But the greatest hurdle isn't technical--it's psychological. Companies need to develop the willingness to talk openly about what they are doing (and not doing) and to let outsiders verify the information for themselves; to give up a large degree of control over the data they generate; and to entrust their corporate message and values to people at all levels of the organization, not just a few designated spokespeople.

Let's face it, this is scary. And it will take plenty of internal conversation, self-examination, training, and re-education for many companies to get to the point of accepting this kind of openness. But those that do this sooner--and do it well--will have an edge over the competition, because they will be in a position to become "trusted partners" of their customers, not just in words but in fact.

Labels: IBM, Nike, Reporting and Transparency