The state of Corporate Responsibility in Europe: 10 trends from the 2011 Responsible Business Summit

The state of Corporate Responsibility in Europe: 10 trends from the 2011 Responsible Business Summit.

Brain drain in Spain: interview with one of the young professionals who has left the country.

In an article about “Spain’s lost generation of graduates“, The Guardian recently reported that rising unemployment was leading to an exodus of young Spaniards looking for better opportunities abroad on a scale not seen since the 1960s. This massive departure of educated and professional young people looking for better pay or living conditions is a source of concern for many, although the exact numbers are not easy to figure out according to a recent article in Actualidad Económica (in Spanish).

Experts disagree both on the volume and the consequences of this “brain drain”. They agree on the causes as unemployment among graduates aged 29 or under is running at 19%. Regarding the consequences, some experts are extremely pessimistic, considering that the amount of money spent on the education of those graduates is lost as many will tend to stay abroad, while others believe that those young people will some day come back to Spain with a set of personal, professional and languages skills that will benefit to the economy and to the society.

Sustainability is directly affected by this “exodus” as Human Capital Management is a key element to build a sustainable business. Companies should include in their sustainability strategy the way they plan to get the resources they need in the long-term. Nothing can confirm the prediction that those young professionals will come back to Spain after they’ve developed their skills abroad. At least, a company shouldn’t rely this hope. Instead, a sustainable business should include in their recruitment strategies how they will target Spanish professionals who live abroad.

I’ve interviewed Alex, one of those young professional who recently decided to move to Germany, to understand why he decided to leave Spain and what spanish companies  can learn from this:

Aequology: Hello Alex, can you tell us who you are and where you work?
AM: Hi, my name is Alejandro Martinez, and I am employed by www.misterspex.es, Spanish division of www.misterspex.co.uk ,  German leader in online sales for prescription glasses, sunglasses, and contact lenses. The company, a personal project launched by Dirk Graber with little capital investment, currently has over 140 employees. A successful business story and a new capital injection has led Mister Spex to venture on an international strategy. After launching projects in France and the UK, the company has recently placed its eye on the Spanish market because of its promising future in e-commerce on a mid-term basis. Mister Spex’s headquarters, located in Berlin, host fully autonomous IT, logistics, customer service and marketing departments. I personally work in the marketing department as an SEO specialist, and combine these tasks with website content creation and management.

Aequology: Why did you decided to move to Germany?
AM: Coming to Germany was both a personal and a professional project. Although I had been in love with Berlin for a few years, I wasn’t strong or brave enough to go for it. The tremendous financial crisis in Spain and the fact that I wasn’t enjoying my personal project as a translator brought me to travel to the only European that enjoyed economic growth in 2010. Besides a promising environment, numerous government aids and an alternative lifestyle that I am extremely attracted to, Berlin hosts numerous start-ups that make the effort of taking risks and train motivated people who are eager to learn and renew themselves. My experience tells me that this kind of approach would be absolutely inconceivable in Spain. Generally, German companies do not focus on short term benefit, but undertake actions believing they will be positive in the long run.

Aequology: How’s the workplace in Germany compared to Spain?
AM: Besides German companies’ predisposition to undertake risks, I have sensed that managers and administration boards are much more open to suggestions. If you have a good idea, they will take it and make the best possible effort to execute it. Besides, I feel lucky because, although I work in the marketing department and Scrum methodology was initially conceived for the IT departments, Mister Spex decided to apply it to the whole company. This method allows projects coming from management to be carried out in a transversal way, communication is 100% open, and, consequently, motivating your peers, feeling integrated in the group, and identifying mistakes becomes much easier. To some extent, this reflects that, indeed, innovating in Germany is much easier than in Spain.
I would also like to highlight that e-commerce, an incredibly attractive field for all countries due to its low investment costs and high profitability, was solidly established in Germany quite some time ago and is now working at full speed. Te constant news informing about the German’s urgent need for technicians and computer engineers are the best indication of this fact. Focusing earlier on this sector has allowed Germany to remain one of most powerful and solid economies, since they have managed to diversify their economy.
Last, I would like to highlight that in Germany it is the companies who assume the biggest risk. In order to have a hired person with a net monthly wage of 1.000 Euro, companies must provide private insurance, pay higher taxes, and provide social benefits, among other things. This does not only allow workers (who, in turn, pay 40% of their salary in taxes) to be aware of the social network supporting them and preventing them from being socially excluded if they become unemployed, but is also a useful tool for the German economy to maneuver because the government always has available funds. In my opinion, the German’s financial system is the key to them being, by large, the strongest country in Europe despite the high immigration rate and tremendous social costs, which would be inconceivable for other countries. I can’t think of a better place to be in Berlin right now!

Aequology: Thanks Alex!

Words: why you should use “sustainability” instead of “CSR”

Alberto Andreu, Chief Reputation Officer & Sustainability Manager with Telefonica, a global Telco MNC, expressed his views about the current Sustainability vs CSR debate in an article for VaultCSR. I know that many people believe that arguing over words is unnecessary and a waste of time, which I can agree with to a certain extent. But, still, using the right terminology is important as we are facing a problem of public perception. I believe that most of the CSR/sustainability leaders and practitioners actually share common values and the issue is not really to agree or disagree on values, strategy or practices but to make sure that a larger audience get the right message about the role that businesses play in building a sustainable future, for themselves, their employees and owners, and for society in general.

Even if it’s mainly a problem of perception, I agree with Alberto Andreu the concept of sustainability describes better the strategy of a company, and its initiatives, that support sustainable development (defined as development that meets the needs of present generations without compromising the ability of future generations to meet their own needs).

In most companies “CSR initiatives” do include actions that cover the 3 dimensions of sustainable development: economic, environmental and social, but the general public tends to see the third aspect only.

As I said, it’s probably a problem of perception, but for many stakeholders:

Sustainability = future/ CSR = present (or even past) actions.

Sustainability = strategy/ CSR = policy

Sustainability = risk & opportunity management / CSR = compliance

As said in a previous comment, some could argue that sustainability = green but, in my opinion, this perception is less problematic than the other (the one that relates CSR to charity) as companies have demonstrated that there’s a clear business case for sustainability initiatives related to the environment (energy consumption reduction, carbon footprint, water…).

Words matter because they can be an excuse for some companies to do nothing when we all know that they should act now.

MBA in CSR…I mean MBA.

Catherine Chong,  an MBA candidate specialising in corporate social responsibilities (CSR) in one of the top school with sustainability or ESG (environment, social and governance) curriculum in the UK, shared on her blog a “cri du coeur”.
In her post, Why are you laughing at my MBA?, she explains how a member of the academic staff gave her the advice, in private, to take the general MBA title rather than the MBA in CSR, and how she can observe a general cynicism regarding her career option.

Don’t we ever learn? Aren’t B-Schools able to see their responsibility in the trouble we got in the last years? And take the necessary steps to correct their past mistakes, going back to the original premises of their curriculum?

MBAs were originally designed at the end of the 19th century as a “professionalization” instrument to prepare managers of large corporations to lead those for the public’s good, not for short-term gains. Unfortunately, the dominance of economics by the neoclassical school in the 1980’s imposed the idea that managers are free agents who should continually seek their highest incomes with no loyalty to their employers and no social responsibility.

Ignoring or laughing at the teaching of ethics and values-based leadership is the type of thinking that got us into so much trouble today. Will we ever learn?

CSR, Warriors and Peacekeepers

 

“Every soldier should be a warrior first”…

“The Social Responsibility of Business is to Increase its Profits”…

Norwegian Peacekeeper during the Siege of Sarajevo, 1992 - 1993, photo by Mikhail Evstafiev.

Before the first peacekeeping mission was launched in 1948, a soldier was often regarded as nothing more than a warrior. With 98,582 uniformed peacekeepers deployed in the world at the end 2010 (United Nations), the military role has shifted from warrior to peacekeeper, and soldiers have been given new tasks involving assisting local populations, training police, restoring governments, supporting rescue efforts or reconstruction.

The “Warrior Ethos” still has supporters though. General Peter Schoomaker, the US army chief of staff, expressed alarm in 2003 that soldiers in Iraq “considered themselves to be support troops — cooks, mechanics and supply staff — rather than fighters”. He’s wrong.

As for the second quote – do I really need to mention the author? – although it’s the title of an article that was initially published in The New York Times Magazine on September 13, 1970, this theory still has some strong supporters too. They’re wrong. The same way the military role has evolved to meet the needs of  the last century, the role of business has changed too.

In the aftermath of the terrible earthquake and tsunami in Japan, Akhila Vijayaraghavan, a Justmeans staff writer for CSR and ethical consumption wrote an amazing article: “Beyond Business, CSR: Help Pouring in for Japan From Companies.”

UPS, Bayer, Abbott Laboratory, Walt Disney, Microsoft, VISA… the big names, the multinational corporations, the very ones that should be applying without mercy “The Social Responsibility of Business is to Increase its Profits” mantra, “are opening out their hearts and their wallets” wrote Akhila.

“Even small businesses are pitching in” she added, writing that “The Extreme Pita restaurant in Riverside (sister city to Sendai) is donating a portion of sales. The Takami Sushi Restaurant in downtown LA is donating 100% of all restaurant profits. In Phoenix, Stingray Sushi has created a Recovery Sushi Roll for $12, all of which will be donated to the American Red Cross.”

Akhila Vijayaraghavan´s article reminds me how wrong my 2 opening quotes are.

 Support the Red Cross.

 

CSR: does size matter?

The BBC reported on Thursday a massive misleading sales in the UK. Nearly 15,000 people who registered with Groupola , a group buying website, to purchase an iPhone 4, “were not told that only eight phones were on sale at the discount price of £99”.

Most people were left disappointed, but the business consequently had thousands more people’s details available to it when sending out daily e-mail alerts. The good news is that the company, run by Marcko Media, has been censured by the UK Office of Fair Trading (OFT), and consequently had to apologise and said those responsible no longer worked there. The same investigation also revealed that an employee of the group, pretending to be a consumer, had posted on social media positive feedback and comments about the “bargain”.

Markco Media, created in 2006, is a startup company, that apparently doesn’t have the skills, the experience, the idea or more likely the strategic objective to develop responsible business practices. I’ve met many similar companies, especially startup companies. To be fair with them, the problem was not necessarily that they didn’t want to engage in responsible business practices but they simply didn’t know “how to” or failed to see the importance or ROI to do so. Most of them didn’t consider Corporate Social Responsibility a strategic priority, seeing it as a domain reserved to large companies only, that seem to be more under public scrutiny anyway. The recent CSR law in Spain, that makes CSR reporting “mandatory” for companies with more than 1000 employees, sends unfortunately the wrong message. In my opinion, CSR is not just for large corporations. Developing responsible business practices and taking in consideration stakeholder concerns and interests in the overall strategy is essential to any business.

So, what do you think? When it comes about CSR, does size matter?

Anuncian la Publicación de un Nuevo Libro Sobre Liderazgo en Sostenibilidad

Este post de Lavinia Weissman fue publicado originalmente en la revista The Story Of Meaningful Use.

John Wiley Editorial (desde 1807) anuncia la publicación en junio del 2011 del libro de Eric Lowitt, The Future of Value, resultado de su investigación sobre las empresas líderes en el campo de la sostenibilidad.

Según mi experiencia, era necesaria desde hacía mucho tiempo la publicación de un libro sobre el valor que aportan a su compañía los líderes que promueven la Responsabilidad Social de la Empresa. El debate en torno a la Responsabilidad Social de la Empresa demuestra claramente que la semántica utilizada para describir los conceptos de RSE, sostenibilidad o inversión responsable suena a jerga para muchos y disuade a quien intenta acercarse a ellos.

Lowitt propone una definición muy sencilla:

SOS-TE-NI-BI-LI-DAD

Maximizar de manera duradera la creación de valor para los grupos de interés de la empresa.

Conozco a Eric desde hace tiempo, en particular a través de su trabajo de investigación en el Instituto de Alto Rendimiento de Accenture y gracias a una persona que reside en mi zona. Después de un periodo como manager en Deloitte, Eric inició su propio negocio en diciembre del 2010, además de acabar el libro de investigación que se había propuesto escribir.

Eric Lowitt

Eric es una de las personas en mi entorno que me entiende a la perfección cuando hablo de la idea de un “Laboratorio de Investigación-Acción Acelerada”. De hecho, Eric ha participado en proyectos de investigación-acción en todas las empresas que forman parte de la lista de “Global Fortune 500”. Los detalles de su trabajo de investigación, respaldado por entrevistas a más de 25 de esas empresas, consideradas  por Eric como las  “líderes en sostenibilidad del mercado”,  constituyen la base de su libro The Future of Value.

Del trabajo de investigación de Eric ha surgido una pauta de discusión muy interesante. Con el apoyo de Eric, algunos de los ejecutivos que pertenecen a los “líderes en sostenibilidad del mercado”, han adoptado un enfoque común que servirá de base para el próximo volumen de The Future of Value. Su objetivo es identificar y promover buenas prácticas y nuevas soluciones que sustenten un desarrollo sostenible a través del cambio sistémico. Eric será el jefe editorial del próximo libro que coescribirán los ejecutivos que colaboraron en el primer volumen, junto con otros líderes en el campo del capital riesgo, del sector público, de la administración del Estado y de las comunidades territoriales.

De manera regular, iré comentando y anunciando nuevos artículos del blog de Eric o reseñas de proyectos que puedan surgir  de los trabajos  de investigación de los líderes

El proyecto está basado en STEALTH (metodología de intercambio de recursos), lo que ilustra las habilidades de liderazgo de Eric y su capacidad de inspirar a los demás.

El libro se podrá comprar a partir de junio del 2011 a través de Eric Lowitt y de The Story Of Meaningful Use.  Los participantes en nuestra iniciativa de investigación podrán beneficiarse de un descuento por venta anticipada. Se puede contactar con admin@ericlowitt.com para conseguir más información.

Lavinia Weissman

CSR in one word: Opportunity

It seems quite challenging to describe what CSR is in 140 words or less. But it’s a great exercise. Leon KayeGreenGoPost.com‘s Founder, Features Editor & Lead Writer at Triple Pundit , Business Consultant and Balkans Advocate recently asked the CSR crowd on Twitter to give it a try :  #CSR and #Corpgov in Tweet-Speak: Express Yourself in 140 Characters (or Less!)

I decided not to use one of the many definitions written by others that I’ve read about the topic in last few years. Instead I tried to define it with my own words and came up with the following definition:

CSR= an opportunity for companies to ensure a sustainable growth while meeting the needs & concerns of their stakeholders

I wanted to avoid buzzwords but, in my opinion, the objective of Social Responsibility, including Corporate SR, is to contribute to sustainable development, so I couldn’t leave this word apart. Stakeholders? Well, employees, shareholders, customers, partners, providers, as Todays’ business world is far more interconnected than it was when Milton Friedman expressed its now infamous idea that the only responsibility a business has is towards its shareholders, nobody can deny that the value demanded by customers, employees, job seekers has created a profound market shift that companies can’t ignore. As SAP’s Chief Sustainability Officer, Peter Graf, put it recently, “sustainability is a trend as important as Internet or the globalization itself” and, “it’s here to say”, creating a world of “new winners and losers”.

That’s the reason why I’m using the word “opportunity“. Compliance is not a strategy, going beyond business is,  and it’s also a fantastic opportunity for companies to manage successfully the new market shifts around value creation: value demanded by stakeholders as previously said, value delivered by the company through its products and its supply chain and the value graded by financial markets, governments and NGOs. Companies that fail to see CSR as an opportunity simply won’t survive.

The business case for CSR: the financial impact of social commitments & initiatives.

This weekend, as reported by JustMeans, US President Obama’s sent a clear message to the Private Sector: CSR Is Your Obligation (and It’s Good for the Economy, Too), prompting Stephen M. Bainbridge,  a Law professor at UCLA, to produce yet another “piece of evidence” in the case against CSR. According to the Author, President Obama, who preaches the false religion of Corporate Social Responsibility, is “wrong” because the “obligation of business is to sustainably maximize long-term profits for shareholder”.  Like many CSR opponents his claim is that a company engaging in CSR actions can only have two motives: being illegal or being insincere.  

Interestingly, on the other side of the bench, I came across the results of a study led by Alan Fustec, professor at the School of Economic and Social Development (ESDES) in Lyon, France, measuring the financial impact of the French Railways Company SNCF’s CSR social commitments and initiatives, more specifically the initiatives targeting the local community and the general public in the community.

 “While these programs are often considered as a cost only, the study shows a net gain for the company and the community,” says Professor Fustec. “5 million euro for the company, and 6.4 million for the community,” adds Vincent Bouznad, from the Department for Sustainable Development at SNCF.

Five major initiatives, conducted in the past two years, have been studied: the use of social enterprises for maintenance works and services, the presence of social mediators in trains, school presentations to teach young people the consequences of their acts (pull the alarm unnecessarily, vandalism …), the fight against exclusion of homeless people and the responsible purchasing of goods and services.

For each action, we  measured the cost (grants to associations, wages, working hours that are spent by employees of the company …), the gain for SNCF (cost-benefit analysis, reduced vandalism, impact on train delays …) and the gain for the community (lower unemployment or subsidies, impact of train delays on passengers, savings in terms of days in prison, greater security. ..), “said Alan Fustec.

A big surprise came from those results: they clearly demonstrated that the initiatives had a positive financial impact both on the company and the society. Besides strengthening SNCF’s public service mission and role in promoting social cohesion, the study, according to Vincent Bouznad also had a positive impact on the operations of the company itself: it contributed to raise managers’ awareness and encouraged them to identify new ways of doing business, therefore creating a “virtuous circle”.

Professor Bainbridge, just like many anti-CSR advocates, tend to forget that there are companies out there that are being sincere in their commitments towards the local communities in which they operate. If a company like SNCF, independently of its legal status and country can achieve positive financial outcomes through its social initiatives why wouldn’t it be the case for US companies? And who says that those actions don’t contribute to “sustainably maximize long-term profits for shareholders” as well?

Sustainability Awards: Doctor Knight and Mister Eye?

Dr C. Knight during the day. Mr. P. Eye at night? The Finnish energy corporation Neste Oil has received simultaneously, two very different distinctions. One for its “Irresponsible Corporate Behavior”, as a winner of the Public Eye Award, a “contest” organized by Berne Declaration and Greenpeace, and dedicated to highlighting the “most evil corporation of the year” from six candidates chosen by the organizers. The other, as a privileged member of the 100 World’s Most Sustainable Companies list established by the Canadian magazine Corporate Knights that “worked with a research firm to winnow down its list of publicly traded companies from 3,000 to 300”, based on financial performance and other criteria.

According to the Public Eye Award organizers, “Within the next two years the Finnish energy corporation Neste Oil is on track to become the number one buyer of palm oil and the world’s largest producer of biofuels”. Even today, they add, “under the misleading label “Neste Green Diesel”, the company sells “biodiesel” made from palm oil throughout Europe. IOI, Neste’s main supplier, has doubled its palm oil concessions as Neste is expanding its productive capacity in Rotterdam and Singapore”. The organizers explain that this a really bad behaviour because, and they’re absolutely right about that, “vast expanses of precious rainforest are sacrificed to the growing European demand for palm oil”. More importantly this production “requires chemicals that poison workers, villages, soil, water, fauna, and flora. The transformation of rainforests into plantations also destroys the habitats of endangered species such as the orangutan.”

In a public statement Neste Oil says it is “disappointed in the outcome of the Public Eye Award announced today and believes that it does not reflect the true nature of the situation. The company adds that it only buys “palm oil produced according to sustainable principles with a verifiable origin that is available” and reminds that it has” received extensive positive international recognition” for its “responsible approach from independent expert bodies in a number of reviews and indexes”. The most recent example of this being the Forest Footprint Disclosure 2010 Report published recently, in which” Neste Oil was ranked as the best oil company in terms of its forest footprint reporting for the second time”.

As for the 100 World’s Most Sustainable Companies list, Corporate Knight “tapped intelligence from the world’s largest sustainability research alliance to isolate the top ten per cent of companies from a universe of 3000 global stocks, which were then transparently ranked based on 10 verified indicators” such as Leadership Diversity, Carbon, Water and Safety productivity. The magazine also mentions that some “controversy research was incorporated into its assessment of each company to provide risk mitigation against companies with severe controversies that could be deleterious to share valuation.”

I’m not sure if controversy could be avoided regarding such a very sensitive topic. On the one hand, the risk is that the general public loses interest in those rankings and awards, and unfortunately, in sustainability in general, because of a lack of credibility of public and private organisms that monitor its execution.  But on the other end, public debate, transparency and critical thinking can help advance the cause of sustainability, avoid greenwash and window-dressing and ensure that companies achieving positive results on some specific indicators stop addressing the concerns of other legitimate stakeholders.