What do I mean by "Corporate Responsibility"?
Corporate responsibility is about fulfilling your company’s responsibility to respect human rights throughout your global business activities and relationships. It includes concepts of business and human rights, sustainability, CSR, and environmental and social performance. The principle of corporate responsibility has been widely endorsed by governments, companies, and civil society and its key characteristics are expressed in international frameworks such as the UN “Protect, Respect, and Remedy” Framework, the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles for Business and Human Rights, and the UN Sustainable Development Goals.
How is this different from CSR?
Corporate responsibility is about addressing substantive risks and impacts related to the business activities and relationships that a company is involved in, avoiding harm rather than simply doing good. It is about doing your fundamental business responsibly ("how you make money"), not about supplementing business with philanthropy or positive acts ("how you spend the money you make").
What are the Benefits?
The business case for implementing corporate responsibility strategies is growing, with support coming from empirical research as well as anecdotal experiences of companies. Some of the benefits include:
- Reducing costs associated with delays, minimizing legal and compliance risks or liabilities and sanctions
- Attracting and retaining employees: A recent study by Project ROI found that effective corporate responsibility practices can reduce employee turnover by up to 50%.
- Access to capital investment: Research by Cheng, Ioannu, Serafeim and Clark, Feiner, and Viehs has found that companies with effective responsibility practices face lower capital constraints. Further, the 2016 MIT Sloan Management Review found that 75% of investment firm senior executives believe corporate responsibility and sustainability practices are material to investment decisions.
- Establishing clear long-term business-oriented purpose and strategy that can drive growth in uncertain and volatile economic times.
- Identifying innovative competitive advantages, including brand differentiation.
- Enhancing reputation, particularly for consumer-facing brands.
What Activities are involved?
Effective corporate responsibility strategies should be (1) tailored to the specific context, goals, and values of your business and (2) targeted to the material risks and impacts associated with your business activities. Every company is different, and risks associated with human rights and social impacts of business are complex and affected by external factors such as politics and public opinion.
Companies should know the material risks or impacts related to their business and show what they are doing to prevent and mitigate risks, or remediate impacts. This involves:
- Risk analysis of the material and salient issues related to your business policies, practices, and relationships throughout your supply chains and partnerships;
- Policy commitments for responsible business conduct, including a human rights policy;
- Stakeholder engagement to understand the experiences, interests, and expectations of those affected by your business activities, particularly in sectors where the ‘social license to operate’ is vital to avoiding additional costs associated with interruptions to business;
- Human rights due diligence;
- Supply and value chain mapping;
- Human rights impact assessments;
- Reporting and communicating risks, practices, and progress to internal and external stakeholders, including investors;
- Collaboration with stakeholders in industry, government, international organisations, and civil society to address complex shared challenges and governance gaps. This may include participation in voluntary multi-stakeholder initiatives or public-private partnerships and dialogues.
The goal is to embed responsible business conduct policies and practices in the core culture, values, strategy, and management systems of your company. This will allow you to identify, manage, and remediate these complicated risks and challenges in the regular course of business.
These efforts should complement existing compliance and risk management systems. They will incorporate concepts and analytical perspectives that focus on how your business affects the world in which it operates, serve to enhance business decisions, and improve your capacity to identify and mitigate risks before they have an adverse impact on your bottom line.
RESOURCES & STANDARDS
- UN Guiding Principles on Business and Human Rights
- UN Global Compact Principles
- OECD Guidelines for Multinational Enterprises
- Sustainable Development Goals
- Children's Rights and Business Principles
- Human Rights Translated: A Business Reference Guide
- UK Equality & Human Rights Commission, Business & Human Rights: A Five-Step Guide for Company Boards
Selection of Reporting Frameworks & Guidance
- UN Guiding Principles Reporting Framework
- Global Reporting Initiative (GRI)
- Integrated Reporting Council <IR>
- Sustainability Accounting Standards Boad (SASB)
- Financial Stability Board (FSB), Task Force on Climate-Related Financial Disclosures
- UK Government, Transparency in Suppy Chains, Etc.: A Practical Guidance issued under section 54(9) of the Modern Slavery Act (2015)