John Elkington | Can India leapfrog in CSR terms?5 min read . Updated: 23 Feb 2014, 04:47 PM IST
A corporate responsibility guru on tools that companies can use to develop their CSR strategies and the challenges they are likely to face
John Elkington is a long-time champion of corporate social responsibility (CSR). A founding partner and executive chairman of British consultancy Volans, Elkington coined the phrase “triple bottom line" in 1994 to include the impact of business on people and the planet in a company’s yearly reports. In 2012, he put forward the idea of the “Zeronauts" in a book titled The Zeronauts: Breaking the Sustainability Barrier that looked at overhauling existing systems to meet the goal of sustainability. The idea was to encourage “a new breed of innovator, determined to drive problems such as carbon, waste, toxics, and poverty to zero".
Elkington, who has previously authored books like Cannibals with Forks: The Triple Bottom Line of 21st Century Business and The Chrysalis Economy: How Citizen CEOs And Corporations Can Fuse Values And Value Creation, says he was in Mumbai late last year for the CRY (Child Rights And You) Corporate Responsibility Summit because he sees “child rights as smack-bang-central to" the new push for CSR in India.
In an email interview, Elkington spoke about the CSR rules under the new Companies Act, and ways in which firms can shape their CSR strategies. Edited excerpts:
What are the implications for business in the 21st century from a sustainability point of view?
The sustainability agenda is going mainstream, and rapidly. The secretary-general of the OECD (Organisation for Economic Co-operation and Development) called in October for the developed economies to reach zero-carbon emission targets by the second-half of the century, which is an immense challenge—but exactly the right sort of ambition. Organizations like the World Economic Forum (WEF) are also underscoring the increasingly close links between energy security, water security, food security and our prospects for peace and/or war. Companies are waking up to the fact that the cost of key commodities is rising, with major implications for their business models. Reinsurance and insurance companies are looking in horror at the rising financial liabilities from weather-related risks. This is becoming the new normal.
Is the “triple bottom line" method of splitting the company report into the economics, social and environment silos still useful?
I still think that the triple bottom line is a useful analytical framework, and support the Global Reporting Initiative approach in this area. But I also support the integrated reporting trend, as illustrated by the work of the International Integrated Reporting Council. I have been involved in the governance of both organizations and see them as signalling a change in the reporting area. As the agenda goes mainstream, so reporting must too. The days of simple citizenship and CSR reporting are not over, but companies that stick with older approaches risk ridicule—and worse.
What were some of the CSR tools you spoke about in your masterclass on “crafting your CSR strategy" at the CRY conference?
CSR has come in from the cold. Increasingly, there are frameworks widely available on the Internet for companies just starting the journey. Start, for example, by Googling OECD + CSR policy tool, and you will find a framework based on my 1995 concept of the 3Ps—people, planet and profit. The Shared Value agenda advanced by Michael Porter and Mark Kramer is a very useful contribution, but as they now accept, Shared Value does not embrace the wider sustainability agenda. So companies developing CSR strategies need to decide on their level of ambition, and use business case and materiality tools to work out what their priorities are going to be. Older tools, including stakeholder engagement and reporting, are being joined by new approaches based, for example, on social media and networks. But the ultimate aim in all of this must be to mainstream this agenda, ideally having it end up with senior leaders like the CFO—a trend I see in the integrated reporting field.
What are some of the challenges that companies face in creating and implementing successful CSR programmes?
Among the challenges are colleagues who don’t “get it", in the sense that they don’t see the business case. Then, there are the lack of skills and budgets. And once you do get started, one of the critical issues is that there are scores—even hundreds—of issues that might be addressed. That’s where materiality reviews are so helpful, particularly when they involve both people inside and outside the organization.
Could you share some tips for companies looking to set up social responsibility programmes in India, following the passage of the new Companies Act which mandates that qualifying companies spend a percentage of their profits on CSR activities.
I see the Companies Act as an interesting political initiative, but wide open to misinterpretation and, unfortunately, corruption. Some companies are already using consultants and legal people to see how they work around the requirements. And the best corporate responsibility programmes have always been voluntary, rather than forced by governments—an approach which often encourages a defensive, minimalist response from most business leaders.
But now the Act exists, business should use the stimulus to jump their thinking to new levels. I think India Inc. has an extraordinary opportunity here to leapfrog other countries in this field. And the reason why I came for the CRY event is that I see child rights as smack-bang-central to all of this. If we can’t protect and develop today’s children, all our talk about future generations risks being fanciful.
I think reporting is key, obviously, because it forces the establishment and improvement of the necessary management systems. But I don’t think we should obsess with reporting—it’s much more useful, potentially, to work out how to help develop and deploy solutions to society’s most pressing issues. Actions speak a lot louder than the sort of words (and images) found in most corporate reports.
Could you explain the concept of “Breakthrough Capitalism"?
Capitalism has gone through a period of profound shock in recent years. We think that is a precursor to a protracted period of what the economist Joseph Schumpeter called “creative destruction". The question is whether we simply let that happen, or try to direct it. The idea behind Breakthrough Capitalism is that capitalism itself can be a highly destructive force, unless properly regulated and directed. But it is the best process we have to build an economy able to house, feed, fuel and educate a world of nine-plus billion people by mid-century. This is an agenda we lay out in our (Volans’) latest report, “Breakthrough: Business Leaders, Market Revolutions".