Should companies have a conscience? (Editorial, Feb. 25, 2002)

Often obscured by the violence of anti-globalization demonstrators are legitimate questions about how human rights and social values will fare in a new world economy. If nations are going to trade together on a level playing field doesn’t that require agreement on respecting workers’ rights and protecting the environment from industrial pollution? Or are more enlightened states to suffer a market disadvantage versus those that employ child labour, ignore human rights and operate without pollution controls or environmental safeguards.

All of this falls under the banner of corporate social responsibility — or CSR — a term we’re likely to hear more of in the coming years as the role of business in society is debated.

There is a philosophy that states corporations have no CSR obligations. They are responsible to shareholders and exist to make profit. The benefit to society is job creation.

This thinking seems predicated on a view that corporations are entities separate from society rather than foundations upon which lives and communities are built. Businesses are an integral part of society, shaping it for good and bad, as much as the forces of politics and religion.

A significant number of corporate leaders do recognize CSR has a place in their planning. In PricewaterhouseCoopers’ recent Global CEO’s Survey of more than 1,100 CEOs from around the world, 68 per cent agreed CSR is vital to the profitability of any company and 24 per cent said they currently issue public reports on CSR within their firms.

And leaders of 36 major firms signed and presented a Global Corporate Citizenship paper at this month’s World Economic Forum in New York, recognizing and supporting a positive role in social development.

In Canada, the Canadian Democracy and Corporate Accountability Commission has released its report on CSR. Hosted by Ottawa’s Carleton University, the commission is funded by public foundations and chaired by Avie Bennett (chair of McClelland and Stewart) and Ed Broadbent (former leader of the federal NDP.)

The commission’s report calls on companies to develop supportive governance structures, including a CSR committee and a senior executive serving as a CSR ombudsperson.

Some of the commission’s recommendations are easier to commit to than others. Pension fund investing, for example, could certainly stand ethical guidelines. A lower return is worth it to ensure money is not invested in companies producing goods with child or slave labour. Nor should firms whose operations aid repressive regimes be included in pension plans.

Other recommendations, however lofty, such as laws barring corporate and union donations to political parties are unlikely to find backers where necessary. Despite embarrassing faux pas such as Enron’s connections to the Bush administration, there’s no political will for cutting political hopefuls off from their sugar daddies.

But there is enough substance in the commission’s report to move ahead with conviction.

Making CSR courses mandatory in business schools would be a good step in raising awareness, and it wouldn’t cost much. And Ottawa can encourage CSR by requiring firms doing business with the government to meet CSR standards. CSR standards should also be included in international trade agreements.

From an HR perspective, CSR makes perfect sense. An employer can’t ask for employee loyalty with the hope of creating a corporate environment that makes workers feel connected and energized, and then turn around and say, “the company isn’t concerned with the well-being of the communities you live in.”

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