The Socio-Enviro-Economic System
A very large and very complex system

The Most Important CSR Trend for 2016: A Move Toward Systems-Level Thinking

Burgess COMMENTARY
Peter Burgess January 6, 2016 at 6:27 pm A move towards system thinking would be wonderful, but we are only at a very primitive level of this sort of thinking. The socio-enviro-economic system is very complex, something that is well understood by scientists, but hardly at all by those that engage with the corporate world. The metrics that we use to manage the system cannot do the job as they presently exist. Money profit accounting is very powerful, but only works in the context of profit performance. Nothing like it exists for people / social impact or for planet / environmental impact. Initiatives like GRI, IRIS, IR, SASB are encouraging, but they are mainly questionnaires rather than systems of metrics. Furthermore, all of these have a focus on making the organization perform better when it really would be more effective if the metrics had a focus on making quality of life better and doing it while doing less damage to the environment or even remediating the damage already done. A way better system of metrics is needed … it can be done. Peter Burgess http://www.truevaluemetrics.org.
Peter Burgess

The Most Important CSR Trend for 2016: A Move Toward Systems-Level Thinking

I’m writing this on Wednesday, Dec. 30, 2015. It’s the dead of winter in the North Pole and, somehow, temperatures there are warmer than in the Sahara Desert and parts of Texas. That’s terrifying.

2015 was the warmest year on record, and people, governments and even businesses are paying the price. And it’s a big price that will eventually halt and downturn all economies.

In 1965, scientist James Lovelock shared that, by the year 2000, “[Climate change will be] worsening then to such an extent that it will seriously affect their business.” Unfortunately, he’s right.

Beyond the cost to business caused by climate change, there are social issues affecting businesses, too. The fact that billions still live in poverty means that the true market potential of most businesses is not anywhere close to being fully realized. Beyond sales, businesses also struggle from a lack of access to talent, a result of faltering education systems around the world.

Meanwhile, some businesses are beginning to see market rewards for being more socially and environmentally responsible. In fact, there are at least 7 research-backed reasons as to why companies will continue to become more sustainable in 2016 (and beyond). As The Guardian has reported, “the benefits far outweigh the costs.”

However, despite the urgency that many talk about the need for change, corporations have been very tactical in their approaches to corporate social and environmental responsibility (CSR). A standard company might launch a giving campaign during the holidays, pilot a “day of volunteering” program during a slower time of year that does more harm than good, and/or initiate a business-greening initiative in one of its units. While all of these might be a step in the right direction, none are especially sustainable or impactful. But if we want to right our wrongs and save our global economy, and more importantly, our planet, it’s time to take much bigger steps.

2016 is the year businesses will finally integrate CSR at the strategy level

Pressure on business to become more responsible is increasing. Not only from consumers and employees, but now from governments and global institutions like Climate Action and the United Nations. The United Nations has called for businesses to partner in reaching the Sustainable Development Goals, and businesses are also foundational partners in the new COP21 Climate Agreement.

Independent nonprofits and monitoring institutions – like SustainAlytics measurement of Environmental, Social and Governance factors – are also adding pressure as their reports are being utilized in rankings like the Harvard Business Review’s report on top CEOs.

Leading CSR professionals, like Kathy Pickus at Abbott and Tim Mohin at AMD, are also paving the way. These professionals have transformed their CSR positions to not just lead some “give back” projects, but to actually work across their entire company to help it do less harm and more good by integrating sustainability efforts and reporting into all layers of their business and supply chain. At the 2015 Corporate Citizenship Conference, Kathy Pickus shared that “Corporate citizenship is not about giving more money and more product, it is about transforming businesses to operate responsibly.”

As AMD demonstrated this past year with its 20th Anniversary of Sustainability Report, improved measurement across its entire business has enabled it to put change into action. In doing so, AMD has earned a place on the list of the 100 Best Corporate Citizens.

At the 2015 Net Impact Conference, I had the chance to sit down with Tim Mohin and talk about the power of reporting, and some of the lessons from his great book, “Changing Business From the Inside Out.” The most valuable takeaway from Tim, as modeled by his work at AMD, is that when companies take a systems-level approach to being responsible, and measuring it at all levels, than they can actually affect more change throughout their business, and their partners.

How to integrate corporate responsibility throughout your entire business

1. Figure out where your business is: Different types of business will integrate CSR differently. As Deloitte’s groundbreaking research shows that there are four archetypes of business that harness social impact for business growth. According to the report’s authors: “Each archetype carries with it a different set of risks and opportunities. While Shareholder Maximizers need to focus on regulatory and reputational risks, Impact Integrators need to clarify business and social impact success metrics.”

Read the report to determine where your business is, and find actionable suggestions for the type of business you are in. Bonus: No matter your level, take the B Labs Impact Assessment. It will show you where you, your team, and your business shines, and where it needs to improve.

2. Have leadership set a goal: Executive and board buy-in is critical to the growth and integration of corporate responsibility. As Alice Korngold highlights in her book, Better World, Inc, “Sustainability is a governance matter.” According to Deloitte, “Social impact is increasingly becoming part of a company’s growth strategy and executives should be intentional about their choices.” Indeed, researchers at Harvard Business School have even measured that “investments in material sustainability issues can be value-enhancing for shareholders” so no matter your line of business, there are cases to be made for setting goals that increase its CSR efforts.

3. Measure where you are, and where you are going: As Tim Mohin has been able to demonstrate at AMD, effective measurement across all aspects of the business and its supply chain helps build the case to create more change. But reports must also be simple. As Mohin shared in an article, “By simplifying corporate sustainability reports to generate meaningful and comparable data, we could fuel a race to the top by unleashing competition to achieve the best performance on the most important sustainability issues.”

As corporations move toward systems-level approaches, we’ll see an evolution in reporting, too. While groups like GRI, SASB and IRIS provide standards to measure against, there will certainly be more innovations coming from the private sector as reporting continues to evolve. Keep your eyes open for innovations in this, and follow sustainability leaders like Mohin to learn about these changes.

4. Pilot more initiatives aligned with core business outcomes: CSR initiatives at companies with scale or die based on their ability to drive business outcomes. Need to lower cost of supplies or distribution? Look at greening initiatives that can save money. Looking for better talent? Design products with less environmental impact. Trying to develop more innovative leaders? Implement an international skills-based volunteer programs.

Don’t do what you think is most interesting, instead do what will actually make a positive difference to your business and to the world. By piloting and measuring different initiatives, you will build the case for which are the most impactful, and be able to leverage your early wins to scale them up and start new ones.

5. Engage external stakeholders: From sourcing to distribution, companies rely on partners to create value, and they need to integrate with the same partners to create real, lasting change. McKinsey’s report, Beyond corporate social responsibility: Integrated external engagement, provides valuable tips to do just that.

“A good relationship with NGOs, citizens, and governments is not some vague objective that’s nice to achieve if possible. It is a key determinant of competitiveness, and companies need to start treating it as one … it requires the same discipline that companies around the world apply to procurement, recruitment, strategy, and every other area of business. Those that have acted already are now reaping the rewards.”

Making the most of 2016

Certainly, systems-level changes are the hardest to implement. They require working with internal and external partners, learning best-practices from business competitors, and innovating with an eye for a better future. In other words, companies, and their understaffed CSR teams, can’t do this alone.

We need to bring together the public, private, nonprofit, and startup sectors to do something profoundly different. To quote Pyxera’s Alicia Bonner Ness from the 2015 Global Engagement Forum, “[We need] the passionate and sincere commitment of everyone involved to tackle the world’s most pressing problems and a shared awareness of the imperative to work together to do so.”

So as you step in 2016, think bigger, move faster, and partner with as many people as possible – the world is counting on you.

Image courtesy of the author

Mark is co-founder and CEO of MovingWorlds.org, a global platform that helps people volunteer their skills around the world, on their own or through corporate-sponsored programs. Since its launch in 2011, MovingWorlds.org has already helped unleash over 2 million dollars worth of professional skills to social enterprises around the world and is the founder of the term, Experteering.

Mark holds a Master’s in Accounting and a BA in Business from the University of Washington, serves as a volunteer co-chairing the American Cancer Society’s National Volunteer Leadership Team, and is a contributor at Huffington Post Impact. Connect with him and MovingWorlds on Twitter.

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