The globalisation of business in a world where people rely on instantaneous worldwide communication through social media has meant that organisations now have to respond to criticism more proactively than they had to in the past. Legislation such as the UK Bribery Act and the US Foreign Corrupt Practices Act also places heavy burdens on organisations conducting business globally, ensuring that they do so fairly and ethically (see our earlier blog on ‘How competition can encourage unethical business practices’).
In a world where social and environmental issues are at the top of most corporate agendas, companies have come to realise that they need to react where consumer demands are concerned. Consumers increasingly won’t accept unethical business practices and advances in social media mean that destructive or damaging practices rapidly fuel online conversations. Organisations are accountable for their actions like never before. Corporate Social Responsibility (CSR) is now something businesses have to take very seriously.
To further the integration of CSR into business practice across the European Union, the EU Commission published a new policy on CSR in October 2011. This policy aims to enhance the positive impacts of companies on society, and to prevent or minimise possible negative impacts. The policy also sets out a plan of actions for the period 2011-2014 which includes:
People also hold the key to successful CSR practices
But it’s not all about process. People also hold the key to successful CSR practices. A recent Bloomberg article reports how bankers across the globe are struggling to convince the public that they are stamping out unethical behaviour that contributed to the 2008 financial crisis, costing taxpayers billions in bailouts. After spending more than 95 billion euros ($128 billion) in capital and guarantees over the past six years to bail banks out, The Netherlands is demanding bankers enforce stricter codes of conduct.
“I swear that I will do my utmost to preserve and enhance confidence in the financial-services industry. So help me God.”
The oath, the first of its kind in Europe, became binding in January and all 90,000 Dutch bank employees must take the pledge or a non-religious equivalent. However, as John Boatright, a professor of business ethics at Loyola University Chicago notes “An oath can be effective only if it is part of a broad reform program [and] combined with more stringent regulation” and a recent survey of 215 senior business leaders conducted by the UK charity ‘Business in the Community’ showed that individual employee objectives often do not align with the goals set by organisations. This can often lead to behaviour which can go against core business values.
Can a country take control of CSR?
India has become the first country to legislate on CSR, forcing 2% of net profits to go to charity. Their new CSR law is a 294 page Act that requires committees to be set up and reviews to be performed by the Board of Directors. There is however, little guidance on enforcement. The issue here is whether there is a need to implement more corporate legislation? It could quite possibly undo the progress that has been made. Businesses may see it as more of a legal constraint and the subsequent ‘red tape’ as something to try to circumvent.
Can information help?
Access to the right information gives stakeholders and communities the opportunity to research information on company behaviours around the world. Understanding and managing this should form a key part of a company’s CSR strategy ensuring that organisations can always make sociably responsible decisions with the right information. The symbiosis between core business values and the availability of information means that access to this kind of resource reinforces a company’s capacity for communication, engagement and collaboration.
On the open internet, information is vast and unsubstantiated. Companies like LexisNexis provide verified sources from more than 36,000 newspapers and global newswires as well as access to business sources, including company, trade and industry reports, publications and blogs. We also provide critical tools to assess key information from 12,500 international and emerging market sources, as sometimes these can be the most difficult areas to discover truly reliable and verified information. LexisNexis alerting and monitoring tools mean that organisations can always make sociably responsible decisions with the right information.