Discovering the ‘S’ in CSR

As Visser puts it, “I really don’t care if people have different jargon. For me, the proof must be in the results, and for too long we have focused on measuring CSR [corporate sustainability and responsibility] activities rather than the societal impacts of business.” Visser’s unapologetic opinion of the current state of CSR affairs? “CSR and sustainability efforts are failing on a catastrophic scale.”

In 2008, Visser set up the research sharing platform CSR International, and in 2012 he started the think tank Kaleidoscope Futures. He is vice president of sustainability services at Omnex Inc. and holds a chair in sustainable business at the Gordon Institute of Business Science. He has also held various roles at the University of Cambridge Institute for Sustainability Leadership. 

Fast Company claims that “anyone interested in CSR will eventually come across Wayne Visser. He is very active in the field, and offers a unique and candid voice on the topic.” Visser is also a prolific author, and we were able to chat with him recently about his newest book Sustainable Frontiers (Greenleaf Publishing, 2015).

Quality Digest: So, what does Wayne Visser mean by corporate social responsibility—or is it sustainability?

Wayne Visser: Yes, well, we’ve had the battle of the labels for the last fifty years and what’s happened is that each time a new label comes in with a slightly different emphasis, the old label survives and adapts. As a result, we’ve seen waves of CSR, environmental management, business ethics, stakeholder engagement, quality, health and safety, corporate governance, accountability, and sustainability. Now, the latest wave to hit business is value creation. 

To me, it doesn’t matter what label a company uses so long as they’re doing these four things: First, value creation—having mainly to do with inclusive economic development. Second, good governance, which covers the bases of good ethics, good leadership, and transparency. 

The third is societal contribution, which is where stakeholder orientation or philanthropy plays a role, but also labor standards and value chain integrity. And the last is environmental integrity which, of course, has to do with sustainable eco-systems, renewable approaches, zero waste, and those sorts of initiatives. I sometimes call these the four strands of a company’s DNA. So it doesn’t matter what business calls their approach to managing their societal relations, so long as they’re covering those four bases.

QD: You used the terms “creating value” and “stakeholder.” Are you talking about creating value for the consumer, stockholders, or suppliers? In other words, are there different criteria for defining value for different entities within the value chain or is that merely a perceived conundrum?

WV: One way to look at it is in terms of stakeholder value. Ed Freeman introduced stakeholder theory in 1984 and we’ve been grappling with the question of “who is a stakeholder” ever since. More importantly—which ones should be prioritized?

There are some fairly good methodologies out there, such as stakeholder materiality assessment matrixes, where you get to survey and prioritize what’s important to stakeholders and what’s important to the company in terms of effects. There are also fairly well established methods for deciding which stakeholders are important. One that I think is quite helpful looks at the power, legitimacy, and urgency of each stakeholder in the group.

That’s one way, but a more useful approach is to start looking at a broader conception of capital. For example, the International Integrated Reporting Framework talks about six capitals. We’ve been used to creating value across financial and manufactured capital. The other four—intellectual, human, social, and natural capital— have been more neglected and less measured. That’s really what is being addressed right now—“How do you measure value creation and value destruction across those capitals?” We’re making some good progress. There are some techniques now to quantify social return on investment and to quantify social capital. 

There are companies like Puma that are issuing an environmental profit-and-loss account, where they translate their environmental effects into financial numbers. There are companies like KPMG that have what they call a true earnings methodology, where they start with the traditional way of measuring value—revenue, cost, and earnings—and then they add and subtract different components of economic, social, and environmental value.

 After factoring in both creation and destruction, they end up with what they call a true earnings figure. There’s a gold mine in South Africa that has applied this methodology and it is pioneering a new way to look at value.

So when we say value creation, it no longer refers to just the shareholders or owners—that myopic approach is what’s gotten us into trouble already. We now have to look at creating value across all capitals.

QD: Are you suggesting that what the various stakeholders perceive as a concern is not really so far apart from each other as we may have thought?

WV: I think that’s true. It’s almost like these strands are being woven tighter and tighter. That’s partly a result of businesses getting far more interconnected, but also because these issues are cutting across disciplines and boundaries like never before. 

I sometimes use the example of HIV and AIDS. Is AIDS a social issue? Well, of course it is. Is it an economic issue? Absolutely. Is it a health and safety issue? Yep. In some ways, the divisions between stakeholders are becoming artificial.

-QualityDigest