Corporate Responsibility in 3D
By Marcy Murninghan, Senior Research Fellow & Bill Baue, Senior Research Fellow
The following is an excerpt from the AccountAbility CR Intelligence Briefing -- a monthly report prepared for AccountAbility Members. Learn more about the benefits of membership or email email@example.com.
The Takeaway: Corporate responsibility is evolving across three dimensions: horizontally on expressions of accountability; vertically on questions of responsibility; and longitudinally on questions of communication and strategy.
The corporate responsibility (CR) movement continues to evolve, slowly but surely shifting from a conveyor belt of single issues to broader consideration of overlapping sustainability, accountability, and governance concerns, as problems such as climate change, water scarcity, and human rights increasingly converge. Similar to quantum physics, we visualize three dimensions of intersecting axes in perpetual motion.
Horizontal : Accountability
A horizontal plane contains expressions of accountability, where companies communicate outward in their sustainability reports, while external stakeholders engage inward on their concerns about sustainability impacts. On the disclosure front, sustainability reporting continues to proliferate (surpassing 5000 reports published in 2010, according to CorporateRegister.com), evolve (as leaders such as SAP innovate), and mature (as standards such as the Global Reporting Initiative expand).
Meanwhile, stakeholders – particularly shareholders during this proxy season – are engaging companies from the outside-in, for example calling for a “say-on-political-spending” in the wake of Citizens United and using the so-called “fifth analyst call” (in addition to quarterly analyst calls) to engage with companies before annual meetings.
Vertical : Responsibility
On the vertical axis, company responsibility increasingly reaches upstream into supply chains, and downstream to cover their products while in consumers’ hands and beyond. For example, Social Accountability International recently launched the Social Fingerprint, a “measure and improve” approach to supply chain management. And sixty companies globally are road-testing new Scope 3 Accounting and Reporting Standards from the GHG Protocol to measuring their supply chain carbon footprints.
In addition to looking upstream, road-testers are using the GHG Protocol’s new Product Life Cycle Accounting and Reporting Standard to analyze the downstream impacts of their products. This enacts Extended Producer Responsibility (EPR), promoting corporate accountability for sustainability impacts throughout a product’s entire life cycle. In 2011, the As You Sow Foundation, which has a dedicated EPR program, filed the first-ever shareowner resolutions asking General Mills and Procter & Gamble to consider adopting EPR policies.
Longitudinal : Temporal
And longitudinally in the temporal dimension, sustainability stretches the continuum in opposite directions, contracting into real-time engagement via social media, and elongating into the long-term perspective embedded in the definition of sustainability. Illustrating the former dynamic, Guardian News and Media encourages stakeholder participation on its Web-based sustainability report and blog. Furthermore, Two Tomorrows, provides “rolling” assurance of all comments, verifying the accuracy of data posted.
On the other end of the timeline, the “tyranny of short-termism” – or what McKinsey’s Dominic Barton calls “Quarterly Capitalism” – is giving way to “Capitalism for the Long-Term” (the title of his Harvard Business Review article), which calls for integrating environmental, social, and governance (ESG) factors into core business strategies to foster more long-term decision-making.
These initiatives tap into the core vision of sustainability: to create resilience and prosperity in perpetuity, preserving and enhancing the world we enjoy for our children and their children—an intergenerational pact to nurture the earth that sustains us. Revolving around this undulating timeline, the corporate responsibility movement is simultaneously climbing up and down the responsibility ladder covering the full lifecycle of products, while also reaching outward and inward to take greater accountability for sustainability impacts, like a spiral wheel turning in the wind.
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