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The future of corporate social responsibility

Wayne VisserWayne Visser

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Suzanne Young:

Welcome to the La Trobe University podcast. I'm Associate Professor Suzanne Young here at the Graduate School of Management, and today we're talking to Dr. Wayne Visser, who is visiting us. He has been here for about a month in the area of corporate responsibility and teaching to our masters of corporate responsibility. I've got a few questions for you today, Wayne. I hope that's OK.

Wayne Visser:

Hi, Susan. I look forward to them.

Suzanne Young:

That's great. You presented this morning on corporate social responsibility, and I was wondering if you could tell me about the main points that you made in your presentation where you critiqued CSR and the ISO 26000 and proposed a new model.

Wayne Visser:

I think that corporate social responsibility has brought us quite a long way, and you can trace it back in various forms to 1850 in the United States. And I'm concerned that we may be getting complacent and that companies and CSR managers are patting themselves on the back and saying, "What a good job we've done." And when you look at the actual problems that we're trying to address, whether they be poverty, climate change, lots of biodiversity, ethical issues around corruption, actually most of the trends are still headed in the wrong direction.

And so the reason I'm critical about CSR is that I think it hasn't made the impact that it set out to make. And I think that there are a couple of reasons for that. I call them The Three Curses of CSR.

One is that it tends to be very incremental because it uses a management systems approach, management by objectives, with standards like ISO 14001, which is an environmental management standard. It's very much about slow, gradual, continuous improvement based on the Deming Quality Circle model. And that has resulted improvement, but nothing like the sort of scale and urgency that we need.

The second curse, I think, is peripheral CSR. So, for many companies in many parts of the world, corporate social responsibility doesn't mean much more than public relations looking after your reputation, doing some marketing, putting out a CSR report.

And even those that have taken it seriously tend to have CSR managers of CSR departments that are quite marginal in terms of the core business. And unless we get CSR to the point where there are people sitting on the board who are looking at these issues with the issues that they consider are strategic to the business, again, I think we're not going to make the progress that we need to.

The third curse is an economic CSR, and in this field we talk a lot about the business case. And I'm not convinced that there always is a business case. I think at the moment the market and the economy still rewards irresponsible behaviour, and we're just here in the middle of the global financial crisis which, if anything, is proof of that. So until we change the rules of the game, I think that companies that are not taking CSR into account can do very well financially.

So the combination of those three curses means that I think we need a new model of CSR. And I call the old model CSR 1.0, taking inspiration from the internet and how that's changed from Web 1.0 to Web 2.0, and there are a number of principles underlying the new model which I can talk you through, if you like.

Suzanne Young:

Yes, I was just wondering if you could quickly summarize those, that would be wonderful.

Wayne Visser:

Much like Web 1.0 was very much about one-way traffic that was quite marginal, there were about 46 million users in 1996, it was mainly companies putting on brochures onto the internet, and how that has changed with Web 2.0 is that it has become scalable, so we've got about a billion users on the internet now, it's all user-generated content, very much two-way, and I think the same sort of transition needs to happen with corporate social responsibility. It needs to go from a fairly marginal activity, where it's one-way communication, to something that's far more interactive, far more experimental, far more scalable.

So if you look at the five principles that I believe underlie this, the first principle is creativity. We need companies to think about the products and services that they are offering in a far more creative way. And to give a few examples, if we look at the Apple iPhone, a wonderfully creative product, but who is it helping in the world? Usually rich kids that can afford it and benefit from it. Compare that to Vodafone, which in Kenya has a company called Safaricom and has launched a product called M-PESA. Now in Kenya, 80% of the population doesn't have bank accounts, so they're completely excluded from the economy, from financial services. So Vodafone has invented a system where people can transfer money by text, and this addresses all kinds of social problems. It means they can receive money from abroad through remittances without paying huge fees on that. It means it cuts out corruption, and it means that 80% of the population is suddenly included in the economy. It's an example of a creative solution.

And another one might be Freeplay, which has got wind-up technology. So instead of having a radio or a torch in Africa where there is no electricity for many people, you now have a piece of technology that you can generate electricity just through winding it up by hand. So these are examples of creativity applied to the social environmental problems. And the area of social enterprise becomes critical, businesses that actually have an economic method but a social objective.

Suzanne Young:

Do you think to do that, though, that would need to have partnerships with the NGO or non-profit sector? The structural change that would be needed?

Wayne Visser:

I think it is. And one of the other principles is responsiveness. And I think the way you get to be responsive to your stakeholders is to get into cross-sector partnerships. If anything, we've learned over the last 20 years that certainly government can't do it on its own anymore because half of the world's biggest economies are companies now. Companies can't do it on their own because, for a start, they're not representing the people. They have nobody voted them in. But also these problems are complex and intractable.

So you might get an example like Rio Tinto, which digs big holes for a living in the ground, makes a huge environmental impact. So they could be defensive about that, but instead what they do is they get into partnership with the World Conservation Union. So definitely that's part of the way forward. Another principle is scalability, because I think CSR has been very marginal to date. It's been for ethical consumers that can afford a premium. And actually what we need is more the likes of Wal-Mart saying, as it has done, that all its cotton will be organic, all its fish will be certified to the Marine Stewardship Council. Suddenly that scales up completely. Or Tata, the Indian steel company, saying that they will make a car as they have done the Tata Nano for $2500. Suddenly, mobility is accessed for the whole population.

So number these sorts of principles. Circularity is another one, I think. We need to close the loops of production so that we're no longer throwing things away. And also we need what I call 'glocality'. I haven't invented that term, but it means to think global and act local. CSR has to be embedded in the local context.

Suzanne Young:

That's interesting. Going back to what you were saying there about partnerships. I have heard that sort of model criticized based on the NGO sector being thought of as being captured by the corporate or by management. And then also another criticism is that the company is using the NGO to do a lot of the work that they should be responsible for in re-vegetation of maybe areas they've mined or other areas like that. What are your views on that?

Wayne Visser:

Well, I think it's a tricky balancing act. And one of the most difficult things about partnerships is, are the partners equal? And so some of the research I've done with Cambridge University on partnership shows that unless it can be established in that partnership that the partners are different but equal, so that each brings a different strength, the NGO may bring community relationships, for example, or they may bring a certain legitimacy in terms of representing public interests, the company may bring certain skills or money or access to distribute some solution. So I think when partnerships work, it's when they pay attention to the power relations of those partners.

It is a fine, fine line that NGOs walk in doing that, but I think we've seen over the last 10 years cross-sector partnerships and organizations you never would have put together before. Green Peace getting into partnership with some big multinational as they did with Coca-Cola to develop Green Fridge, for example. These are the sort of solutions we need and in some ways I think the NGOs need to be brave about that but stick to their values and still have the capacity to be critical.

Suzanne Young:

You talked also about the effect of the global financial crisis. I was wondering if you could just expand on that a bit, please, and talk about if you think the global financial crisis has affected the interest in the uptake of CSR, and what are the key drivers of CSR in the current environment?

Wayne Visser:

The first thing I suppose we should acknowledge is that the global financial crisis could be seen as a failure of CSR, a complete crisis of responsibility, if you like, really the product of an age of greed where excess at all kinds of levels has been allowed to go unchecked. In terms of actually our CSR programs and companies being affected, what we see is that it depends how strategic the CSR is in that company. It has actually been a very good test. So if for a company all CSR means is writing a check and giving a donation to a community, that sort of philanthropic approach has suffered.

If, however, they really aligned to their core business, so if you're Coca-Cola and you're realized that one of your strategic issues is water, and for obvious reasons you're not going to suddenly cut back on water programs because this is important for the survival of your business. So I think it's been a good test of how strategic CSR is.

Suzanne Young:

You've been in Australia now for about four weeks. I was wondering if you could just tell us a little bit about what you've seen in Australia maybe compared to your international experience? Maybe contrast CSR in Australia compared to maybe the UK or South Africa?

Wayne Visser:

I think in Australia, what I see among people working in CSR is quite a high level of frustration, and some of that seems to be around government policy and how that has not made the sort of progress that was hoped for or even promised by the new government.

And I think some of that has to do with the extent to which there are very strong lobby groups and sectors that dominate the Australian economy, and the extent to which the economy is sheltered to some extent by China, by being a major supplier to China.

Having said that, I've seen a few areas where I think Australia is demonstrating best practice. And I'll just highlight two. The one I think is to do with community engagement. The extractive industries here, the mines especially, have had now a long track record of trying to figure out how you engage with communities in a way that is respectful, that listens to them, that includes them, especially indigenous communities. And I think there's some best practice there that the rest of the world could learn from.

The other is corporate governance, because I think Australia has been partially sheltered from the global financial crisis because 10 years or so ago, it got its banking house in order after a bit of a scare that it had. And so it has been much tighter on the regulation of the banking industry. As a result, it hasn't been as exposed when the global financial crisis hit. So those are two examples.

Suzanne Young:

OK. Thank you very much. And thanks very much, Wayne, for sharing your thoughts with us today.