Andy Wales: Big Business, Big Responsibilities: from ‘villains’ to ‘visionaries’

Business Fights Poverty

Big Business, Big Responsibilities: from ‘villains’ to ‘visionaries’ charts the journey that many major companies have been on over the last twenty years, where issues that were previously defined as corporate social responsibility (CSR), philanthropy or environmental compliance are now becoming core to future growth strategies. We welcome your comments and thoughts in the debate here. You can find out more about the book at

The story of big business as the ‘villain’ grew through the 80s and 90s as campaign groups very effectively highlighted cases of environmental damage, such as oil spills, and human rights abuses such as child labour in East Asian supply chains. Of course we still have oil spills, including BP’s very serious challenges in the Gulf of Mexico, and in the last couple of weeks we have seen further allegations of UK retailers buying from companies which use child labour. In some ways, if you just read those media stories, you might assume that in the last twenty years not much has changed.

But actually a great deal has changed. Leading businesses across a range of sectors have taken a dramatically different approach to corporate responsibility and on some issues are now right at the cutting edge of understanding and responding to issues which threaten ecology and human welfare in a way that they were not twenty years ago.

It is at its heart an optimistic book. We argue that companies succeed best in societies that succeed, and that businesses have a strong interest in supporting economic and social development and environmental protection. But we know also that this potential is severely limited if it is undertaken in isolation from others. It is only through collaboration, shared learning and consensus building between business, government and civil society that we will attain the systemic change required to achieve sustainable development.

We believe that five new realities have emerged which mean that some major global businesses are now more likely to be leading calls for environmental protection rather than lagging behind them; to be promoting human rights rather than ignoring them; and to be working with NGOs rather than against them.

• Shared Risks mean Shared Responsibilities. Companies are moving beyond a philosophy of enlightened self interest to recognize that they are but one institution that faces shared risks and therefore shared responsibilities. The largest global companies – especially those that depend on scarce land or water resources such as food and beverage companies – that will first see and respond to new ‘tragedies of the commons’ in the coming decades. Some of the world’s largest companies are leading projects to understand environmental resource scarcity and ensure that these resources are managed successfully to support generations to come.

• Today’s challenges are best addressed through collaboration. This approach to partnerships is relatively new and companies, NGOs and governments are learning the opportunities and challenges of working together. There is interest in such approaches beyond a group of leading companies and it is possible that these partnerships will lead to greater and more significant links between these institutions, particularly businesses and NGOs.

• Being trusted has never been so important. When companies are exposed as having abused human rights or attacked for undermining environmental standards, nowhere is it more keenly felt than internally. Surveys of recent university graduates regularly cite the perception of the social responsibility of a company as a major reason for choosing a particular business to work for and this remains an important issue once people get into their careers.

• Changes in public policy to address sustainability challenges will increasingly shape the business operating environment. Action from government to address global challenges is beginning to re-shape the regulatory and market context within which business operates and this trend will likely accelerate as momentum for action grows within governments. However, the exact form of this intervention is still being shaped and leading businesses are beginning to recognize that it is far better to engage constructively in the co-creation of policy approaches that achieve sustainability outcomes consistent with business success than to shout from the sidelines and be subject to poorly crafted legislation.

• The successful companies of tomorrow are treating sustainability as an opportunity for innovation, not as a risk to be mitigated. A decade ago addressing social and environmental challenges was frequently viewed by big business as solely an exercise in risk management. The contrast between this risk mitigation approach and the innovative approach taken by the leading businesses of today is stark. An increasing number of businesses view these global sustainability challenges not just as risks to be mitigated but also as opportunities to drive innovation. The successful companies of tomorrow will not be those that carry on with business as usual, but those who view solutions to these global challenges as drivers of innovation and opportunities to develop the successful products of tomorrow.

Throughout the book we draw on examples of major companies around the world who we believe are leading in areas such as progressive climate policy, taking a holistic view of job creation in the value chain through new sourcing and distribution models, and the internet and human rights. We also touch on how real change is achieved through ‘everyday champions’ throughout businesses beginning to integrate these issues into their day jobs and why these champions should be identified and encouraged. It is only through mobilising those millions of employees that we will see the scale of the change necessary to tackle the challenges which societies face.

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14 Responses

  1. Whatever you call it – Corporate Responsibility, Sustainability, Community Investment – this (relatively) new aspect of a company’s activity has the potential to change the world. It is heartening to see that companies are beginning to understand that it is in their own best (business) interest to help society succeed.

  2. As a field practitioner in value chain development approach, I found the book is more relevant to the current realities and reads about the interesting element of value chain integrations and Multi stakeholders participations through the collaboration, shared learning and consensus building between business, government and civil society ; it is one of the strategy solution to create the win-win situations among the chain players where every players should find their role that will ensure the systemic change; which was missing on our current private sector development module. Still there is tension among the civil society, NGOs and social enterprises and corporate business module, therefore we have to define the critical role of civil society, NGOs and social enterprises where there should a complementary role rather than the “market distortion” which is a current perception of bigger companies.

  3. “The successful companies of tomorrow are treating sustainability as an opportunity for innovation, not as a risk to be mitigated”
    This is a sentence that I hope to be true; in my heart I have always felt that being sustainable should be obvious business sense, but then I’d wonder if perhaps I’m just missing the point.

    My cynical side suspects that far too many still see short term profit as just plain profitable enough to allow them to ignore this seemingly simple truth.

    If as you observe though, the younger generation is in fact embracing this quality as one that ranks high on their lists, then perhaps that hope is indeed sustainable.

  4. There is nothing new in transnational corporations (TNCs) taking advantage of the current climate for corporate benefit/profit.

    The exercise may be described as Corporate Responsibility, Sustainability, or Community Investment the effect on most host States and their communities is the same. Host economies are poorly served.

    Years ago the UN Draft Code of Conduct on Transnational Corporations was largely ignored. Now these companies see a benefit to their bottom line and still want to be patted on the back.

    Things I would consider as fair or some way in addressing core issues include equality & fairness of contractual terms and obligations in TNC host states and proper accountability of business practices in TNC host States.

    Additionally, I would like to see TNC activity and responsibility in host economies aligned to those in their home economies

  5. I see the biggest challenge for sustainble businesses in the SME segment, not among the large corporates where it has become an accepted “truth” about future growth and survival in the market place. Among the SMEs any investment and choice that may affect the price of the end product or service negatively will need to show also short term benefits (clear competitive advantages, increased customer loyalty etc). Some sectors are more affected by this than others, non-consumer suppliers in traditional sectors are generally less responsive and we need to be very clear about the market demand and financial benefits of acting responsibly. Considering the importance of the SME segment to our national economies, we cannot ignore that the arguments used for big corporates will not be as effecitve for the medium and small companies.

  6. The so-called risk management sector has done much to impede progress in this area. By characterising host communities as potential sources of risk – be it labour unrest, corruption or physical threat to assets and personnel – the sector has contributed to a defensive mindset in many comapnies. All too often, external engagement has been left to corporate security or public relations divisions. Both are essentially reactive disciplines. Matters are certainly improving, but companies need to become more pro-active in the management of their corporate integrity, recognise that they are sometimes sources of risk to their host communities, rather than the other way round, and take ownership of integrity at the highest levels. Ethical standards need to be applied across corporate functions and this requires positive board level engagement. It is encouraging that the impetus for this approach is emerging from within corporates, rather than governments, regulators and NGOs, although all have a role to play.

  7. It is encouraging to see the move toward responsible and sustainable behaviour being driven by personal ethics as well as by business imperatives. There is still a long way to go though and some of the problem areas we need to address lie where:
    ● There is distance and poor communication between actors in the supply chain
    ● Short term gains being taken at the cost longer term benefits
    ● Poorly designed or non-exisitent KPIs which may enforce damaging or negative behaviour
    ● The efforts of those interested in introducing and embedding ethical behaviours are disconnected from commercial operations
    ● There is a preference to step away from issues and problems rather than engaging with them
    ● Stakeholder impact can fully incorporate the true impact on all of the stakeholders
    ● “Do No Evil” can be more positively implemeted and interpreted as “Do Good” (this is not aimed at Google, despite using their terms)
    ● Engagement with stakeholders is developmental and collaborative

    There have been incredible steps forward by some organisations and I trust that sharing, postive behaviours can be encouraged and followed by more and more people and the places where they work.

  8. for me the co-called CSR ? The World Business Council for Sustainable Development in its publication “Making Good Business Sense” by Lord Holme and Richard Watts, used the following definition. “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”

    The same report gave some evidence of the different perceptions of what this should mean from a number of different societies across the world. Definitions as different as “CSR is about capacity building for sustainable livelihoods. It respects cultural differences and finds the business opportunities in building the skills of employees, the community and the government” from Ghana, through to “CSR is about business giving back to society” from the Phillipines.

    Traditionally in the United States, CSR has been defined much more in terms of a philanphropic model. Companies make profits, unhindered except by fulfilling their duty to pay taxes. Then they donate a certain share of the profits to charitable causes. It is seen as tainting the act for the company to receive any benefit from the giving.

    The European model is much more focused on operating the core business in a socially responsible way, complemented by investment in communities for solid business case reasons. Personally, I believe this model is more sustainable because:

    1.Social responsibility becomes an integral part of the wealth creation process – which if managed properly should enhance the competitiveness of business and maximise the value of wealth creation to society.
    2.When times get hard, there is the incentive to practice CSR more and better – if it is a philanphropic exercise which is peripheral to the main business, it will always be the first thing to go when push comes to shove.
    But as with any process based on the collective activities of communities of human beings (as companies are) there is no “one size fits all”. In different countries, there will be different priorities, and values that will shape how business act. And even the observations above are changing over time. The US has growing numbers of people looking towards core business issues.

    For instance, the CSR definition used by Business for Social Responsibility is: “Operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business���.

    On the other hand, the European Commission hedges its bets with two definitions wrapped into one: “A concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”.

    When you review each of these, they broadly agree that the definition now focuses on the impact of how you manage your core business. Some go further than others in prescribing how far companies go beyond managing their own impact into the terrain of acting specifically outside of that focus to make a contribution to the achievement of broader societal goals. It is a key difference, when many business leaders feel that their companies are ill equipped to pursue broaders societal goals, and activists argue that companies have no democratic legitimacy to take such roles. That particular debate will continue.

  9. I am particularly convinced by the authors’ point about encouraging links between businesses and NGOs. All too often, the human rights community sees businesses as heartless evils while corporations view NGOs as mere idealists if not troublemakers. Yet nothing good will come of a too-often seen scenario where corporations can only wait and hope that NGOs will not start picking on them for their potentially negative human rights impacts. The two sides should be able to realize that developing a trusting relationship is the way forward and that pre-emptive work goes a long way.

    Nowadays, no CEO would publicly say that their company is not “ethical”, which is a great development pointed out in the book presentation. But this notion is vague and too many practices labelled as “ethical” may actually have a disastrous impact on human rights, as the recent Vedanta story shows us.

    What is there to do for businesses then? Well, norms do exist. The preamble to the Universal Declaration calls on “every individual and every organ of society” to promote and respect human rights. International human rights law provides a comprehensive body of rules that corporations could and should respect, and NGOs can play a crucial role in making this happen, while continuing to play their whistleblowing role. Collaboration really is key here.

  10. In response to Nadia Bernaz’s point, I think there is an additional problem that NGOs are often seen by the media and the wider community, unquestioningly, as being in the right. It is not always the case. I am aware of at least one case in which an NGO has been created by a company – at arm’s length – specifically to target and undermine competitors. No wonder mutual distrust has built up over time. Greater accountability and a more embracing and cooperative approach by NGOs would help a great deal to reduce this mistrust. Meantime, there is no reason why the business community as a collective should not act as the custodian of its own integrity.

  11. As the founder of Fashioning Change, a company working to empower consumers with the CSR information of companies of all sizes, our view of CSR ultimately comes down to transparency and an authentic commitment to positive systemic change in core business operations.

    We understand that systemic change, as much as we’d like it to, doesn’t happen over night. In our review of the CSR of a company some of the things we look for include: an authentic commitment with measurable KPI’s; defined milestones in the areas of human impact and environment; stakeholder accountability to those milestones; and integration of NGO partnerships into operational practices.

    This conversation is truly inspiring. I look forward to connecting with many of you and further exploring this topic.

  12. In response to Julian Fisher, I completely agree that part of the problem is that the media often tell stories about the “bad corporation” against the “good activists”. No wonder then that corporations are being suspicious of organizations that can potentially make their profits drop (see Vedanta’s performance today!). The Vedanta story tells us that there is a lot to gain in collaborating before things get out of hand.
    While I don’t see any obstacle, in theory, to “the business community being the custodian of its own integrity”, as Julian put it, I think human rights issues are often complex and sometimes not very well understood by the business world. Therefore, collaborative projects with organizations who may have been working on the ground for years can be a real plus.
    In short, I think it’s unfair to say that corporations are only profit-driven and don’t care about their impacts, but similarly it’s also unfair to say that NGOs are only happy when they name and shame such and such multinational corporation. These are bitter victories for the human rights world. Allowing businesses to make good profits while ensuring that human rights are protected is the win/win situation I’m hoping the majority of the stakeholders have in mind.

  13. Thanks everyone for the excellent comments below – hopefully we can keep the conversation going.

    Nadia and Julian’s discussion below is important. One thing I think we often forget is that perceptions of different sectors (business perceptions of NGOs, for example, and visa versa) and subsequent levels of trust, take time to change. If we only look over a short time frame of a year or two, then it can appear that not much has changed, but if we look over five or ten years we can see very significant changes, and that should give us hope. I’ll use an example from an issue I work a lot on, water scarcity. The speed at which companies have picked up the concepts such as water footprinting, a methodology developed by academics such as Hoekstra and experts at WWF, and used it to understand the water scarcity risks that they share with communities and ecology, has been rapid. Many food and beverage businesses are now using this methodology internally to understand water risks and build watershed protection partnerships. Yet because we are still only about 18 months into companies using this approach (SABMiller published the first corporate water footprint 12 months ago, and we are about to launch our latest report, Water Futures, with WWF and GTZ, at Stockholm Water Week this week) – a lot of the activity is not yet visible outside of companies. Yet within 5 years you will see a significant impact on how companies engage with communities around water issues as a result of this approach. Developing and evolving together a common language and methodology – like water footprinting – is very helpful for business / NGO collaboration.

    The point made earlier in the conversation about SMEs is also critical. It is true that their motivations can be different in this area from big businesses – their strategies may be more short term, their cashflow situation much tighter, and therefore their ability to become more progressive on some of these issues may be more limited. One of the big opportunities – and again a change that is still working its way through the system, and will take some time – is big businesses requiring more from their smaller suppliers in terms of action towards sustainability. And of course we also see many of the breakthroughs that we need to solve some of the world’s greatest challenges arising from entrepreneurs in the SME sector.