Measuring Corporate Sustainability Leadership

UN Global Compact defines Corporate sustainability as a company’s delivery of long-term value in financial, social, environmental and ethical terms. It is about 10 years since it has brought out the 10 Principles covering four issue areas of the UN Global Compact – Human Rights, Labour, Environment, Anti-Corruption – but it endeavors to go beyond these to encompass additional sustainability priorities such as – “Broader UN Goals and Issues” referring to an array of global issues – based on the most acute or chronic global challenges – including Peace & Security; the Millennium Development Goals; Human Rights; Children’s Rights; Gender Equality; Health; Education; Humanitarian Assistance; Migration; Food Security; Sustainable Ecosystems and Biodiversity; Climate Change Mitigation and Adaptation; Water Security and Sanitation; Employment and Decent Working Conditions; and Anti-Corruption.i


Recently Aman Singh Das wrote at the Vault’s CSR blog http://bit.ly/hJjYxE Quote: “At a recent breakfast hosted by the Global Reporting Initiative (GRI) and NYSE Euronext, the Conference Board’s David Vidal asked an insightful question: What are the top three reasons for your company’s reluctance to embrace sustainability—and to adopt sustainability reporting? The responses that came from an audience representing the glitterati of the corporate social responsibility world might surprise. What these responses point to, however, is the continued sense of reluctance across senior leadership toward combining the social and environmental with corporate.The 11 challenges indicated were:

  1. Doubt
  2. Liabilities
  3. Denial
  4. Resources
  5. Causality
  6. Lack of Global Standards
  7. Benchmarking
  8. Lack of comparative credibility
  9. Uncertainty
  10. Fear of the unknown
  11. Fear of the known UNQUOTE

The point of contention to note: “is the continued sense of reluctance across senior leadership toward combining the social and environmental with corporate.” Could it be due to one of the 11 challenges – Causality [5] or is it due to the difficulty of comprehending Ethical & Fiscal Responsibility? This needs a resolution – how to measure or rather measure up to the challenges?

Corporate Sustainability Leadership is of recent origin an off-shoot of UN Global Compact. The 10 Principles of UNGC have been in vogue for over a decade, and had they been brought under the grip of effective controls then the glitterati would not have doubted [1] the successful implementation of the demands of Sustainability. The doubts need to be cleared which could be done if the 10 Principles rest on a solid foundation.

Foundation is the essence of the fundamentals in the field of knowledge. UNCAC emerged in the year 2003 but had put in a document comprehensive, well structured, directed towards the Member States who are signatories to start with enabling ratification of the Treaty. UNCAC covers one single aspect of UNGC which is Principle 10 Anti-corruption. Corporate within the ambit of the Member States of UNCAC should have no difficulty in adopting Article 12 of UNCAC for Sustainability. At the same time UNCAC is a guide to create a document specific to Principles 1 to 9 of UNGC in a similar manner. Together UNGC 10 Principles would perforce bring about an international cooperation as stated in Chapter IV of UNCAC that provides credible comparability [8] leading towards a consensus of Global Standards [6]. Without Global Standards Benchmarking [7] will never be feasible. Without benchmarking UNGC would ever remain a document of good intentions.

Corporate has only fiscal responsibility but functions within the framework of ethical responsibility. Currently the tendency to create jargons without defining them results in lack of Global standards. Corporate Governance, Business Ethics, Corporate Social Responsibility and now Corporate Sustainability leadership are all terms that need to be brought under the Global Standards well defined affording a meaningful interpretation and therefore measuring it uniformly globally. When social and environmental aspects are brought under fiscal responsibility Corporate Resources [4] are stretched without the knowledge of extent of commitment for the future[10]. Davos meet on UNGC and the UNGC Blueprint expecting Corporateto undertake actions in support of broader UN goals and issues”, are extrapolation of symptoms of fear [11] and the uncertainty [9] as to how governments would pass legislation on these social and environmental problems [2] on Corporate.

UNGC has a structural flaw in its implementation program which is directed towards Corporate, unlike UNCAC that has the support of the Member States. UN Global Compact by its perspective encompasses the global operations that would be impeded by the lack of governmental initiatives[3]. The intentions of UNGC are indeed laudable but Corporate has a fiscal responsibility of balancing their costs vis-a-vis the operational efficiency that need the approval of the stakeholders. These costs have necessarily be brought into focus the return on investment criteria [5] perforce.

GRI has with good intentions absorbed divergent aspects of sustainability factors for different industries. That is the flaw of the structure of Corporate Sustainability Leadership, “to undertake actions in support of broader UN goals and issues”. It is not the 8600 companies around 136 countries who take up these issues of Environmental and Social Responsibility but every organization globally need to be measured and certified. The 10 Principles of UNGC are the common tenets that each company has to pass to become sustainable in the social environment. It is not merely a comparative credibility between one and another but the capability of disparate elements of industries across converging into a single accountability index within the national grid of economy.

Conclusion: These 11 Challenges need to be reinvigorated for a sustainable interest in the field of social and environmental responsibility.

Based on the above factors I have commenced writing my book on Measuring Corporate Sustainability Leadership by IBCM. Your comments and contribution are welcome and it will be duly noted in the book. Please also see in this site my blogs: 1. Angel’s Advocate Measuring National Grid of Governance http://wp.me/p18MVb-6h and 2. My comments on CSR 2.0 Competitive Advantage for the Future, by Alberto Andreu Pinillos http://wp.me/p18MVb-85, that would give insight into the approach the proposed book would undertake.

Jayaraman Rajah Iyer

iBlueprint – For Corporate Sustainability Leadership – United nations Global Compact

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7 thoughts on “Measuring Corporate Sustainability Leadership

  1. jayaraman, this is so important. keep up the good work. hopefully corporations like HUL will wake up to their responsibilities; like cleaning up the mercury and taking care of the ex-workers and their families here in kodaikanal.

  2. Thank you. I am also confident about US and European Corporations who would surely see the brighter aspects of controlling environment. Hindusthan Unilever should be forced to reverse their strategy of burying the past along with Mercury and should be made to retrace their steps to clean the place. I said US & European and did not include Indian because Indian Corporate have never taken an initiative to be proactive in these matters. If any Indian corporate is offended they should not hesitate to get in touch with me for a proactive rating of where they stand today.

    Thanks

  3. Very interesting post. Measurement is key. Voluntary ESG reporting has become common practice among large corporations but we’re reaching a tipping point where voluntary reporting won’t be good enough to overcome the 11 challenges that you mention. I totally agree with you when you write that “every organization globally must be measured and certified”. I believe that ESG reporting must, to some extent, be made mandatory in order to ensure transparency and provide all stakeholders, investors, employees, customers etc. with the data they need, to assess materiality as well as the credibility and impact of companies’ sustainability practices. In my opinion, the GRI provides an excellent framework for mandatory reporting, with the need for additional specific industry-focused KPIs.

    • I thank you for your valuable comments.

      GRI does give a very good framework. What is needed is the structuring of these KPIs in a manner the reporting system is able to develop consolidated results by the 10 Principles of UNGC that would form the basis of comparability to all corporate, globally. My book shall provide how to consolidate these KPIs converging into the 10 Principles. I can take GRI framework and show how this could be achieved, unless GRI has any objection to it.

      Voluntary reporting gives a sense of having complied with the 10 principles individually but it fails to fulfill the purpose of UNGC collectively which is to provide an assurance to the general public that the ethical responsibility undertaken by the corporate satisfies their expectations. The tendency of the Corporate is to take the results directly to Dow Jones whose index system further elevates to a level of forecasting models in the speculative enterprise. Dow Jones Index must cater to an ordinary $1000 per annum investor and a farmer in Indonesia should feel satisfied that what Monsanto does is for their benefit. Simplicity of the results is the real key for a successful UN Global Compact. Now it is left to the big Corporate giants.

  4. Jayaraman interesting, the environment we live in exists primarily because the universe maintains equilibrium. Yet humans continue to violate this balance. We pollute river systems the air we breath and damage the environment in countless ways, without considering the consequences. I guess this is the price we pay for human progress! Its sad to see that we have to resort to imposing legislation, bans and treaties and compacts in an attempt to reign in this behavior.

    Having said that educating and informing appears to be the mechanism to facilitate this transition, and you are paving a great path that future generations will look back and thank you for. Your approach at informing business leaders is an early phase, we must also focus on educating this at primary and secondary education levels and instill “Sustainability Leadership” at all levels! Finally as consumer we need to demand CSR as a basic right for all of us.

    • It is indeed the universal equilibrium corporate must start learning. They seem to be highly confused as to the diversity without a notion of equilibrium maintained in every substance of the universe. It is the equilibrium that I have taken note of in my first book the basis of all my analysis that I could write about the national grid of governance. My second book that I have commenced is about Corporate Sustainability that I have also initiated the process of creating documentary on the 10 Principles of UNGC by the active participation of IB School students of Kodai International Scool. Kodaikanal Tamil Nadu. I endorse your view on school teaching CSR.

      Corporate first of all must come out of the tendency to spot jogging without going forward with fresh management theory. The application of intangible for management science is next only to zero that emerged as a number on its own right. Corporate Sustainability Leadership is now tossed as a least understood highly hyped jargon particularly by big corporate and happily, quietly run by big 5 consulting firms. Corporate is in a gridlock.

      I am confident school kids will come forward if not the university students as they are highly controlled by the existing theories that they would be afraid of challenging because of the big names. Here is an opportunity for them to challenge what I have already put through.

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