Corporate Sustainability: It’s all about the impact

06/09/2011 at 10:55 3 comentarios

CSR means dealing with social impacts

I am more and more convinced that being a sustainable and socially responsible company revolves around dealing with its own impacts. Recently I read a very interesting article on The Guardian: “Measuring social performance is difficult but essential”.

This article addresses a very important issue: Social impacts are relevant and we need to measure them properly.

An example why it is important: As long as negative social impacts can affect a company’s stock value (among others), they need to be measured, managed and reduced. Not only because of the negative effect on our image or on our reputation, but because it is threatening to the very same sustainability and survival of the company.

I agree with the writer of the article about the fact that measuring social impacts is very challenging. It is difficult to set the boundaries and use a valid method. It is maybe one of the weaknesses of this approach, but different groups and institutions are working out a methodology. If we cannot identify and asess our impacts, then it will be difficult to know where we we stand and where to start.

Product responsibility

The other weaknesses are two very important points that need to be considered carefully. One of them is, as it is pointed point out in the article, product responsibility. This is a crucial issue, maybe the most visible part of the social impact of a company. Is your product harmful? How harmful? Are you doing anything to limit/reduce that damage? If the product is harmful no matter how you use it, do you have a strategy to replace it by something else? This is an introspective exercise that companies have to do. And if they do not do it themselves, they might be forced from the outside sooner or later (authorities, social media, NGOs), but then it will be too late. An honest reflection on what your company does is needed.

Supply Chain Impacts

The other weakness is that, too often, we forget that social impacts (both positive and negative) do not end within the companys borders. It is necessary to audit/inventory all kind of social impacts along the whole supply chain. If we concentrate just on the social impact of the final product or service, we are considering only the top the iceberg. A food company might undertake all kind of steps to reduce trans-fats, promote healthy nutrition and limit sugar content in order to reduce its negative social impacts. All these efforts are in vain if our suppliers use bonded or child labour. Therefore I think that social impact auditing along the supply chain should be a must.

Last but not least, all kind of efforts, activities, charities etc are sometimes not enough to compensate for negative social impacts. This is the case of PR/Marketing campaigns of companies from controversial sectors. But then we are not talking about social responsibility, but about greenwash and smoke curtains.

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Entry filed under: Corporate Social Responsibility, Sustainability. Tags: , , .

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3 comentarios Add your own

  • 1. Frederic Page  |  06/09/2011 en 12:44

    Very interesting post. I totally agree that the question of a company’s impact on its environment is essential to assess sustainability. It requires both an internal and an external, objective, analysis and a permanent dialogue with those who are directly or indirectly affected by a company’s activities and behavior, employees, clients, providers, local communities..Using this approach is also good because being accountable for its impact forces a company to be less self-centered and more proactive. Potential impacts are as important as actual impacts.

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    • 2. Juan Villamayor  |  06/09/2011 en 14:04

      Thanks for your comment. Absolutely, potential impacts need to be considered as well. A previous analysis of possible “collateral” effects is needed.

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  • 3. Boundaries of CSR « SRI Portfolio Management  |  27/12/2011 en 08:46

    […] Corporate Sustainability: It’s all about the impact (juanvillamayor.com) […]

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Juan Villamayor

Consultor en Responsabilidad y Sostenibilidad Empresarial (RSE). Economista y MBA radicado en Barcelona, con un perfil eminentemente internacional.

Es posible generar más valor mientras se aplican principios éticos. Al final todos salen beneficiados: las empresas, la sociedad y el medio ambiente. Eso es lo que yo llamo "Negocios Con Sentido Común".

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