Discovering the ‘S’ in CSR

Wayne Visser dispels myths and throws down the gauntlet

Published: Thursday, October 22, 2015 - 13:09

Born in Bulawayo, Zimbabwe, and raised in Cape Town, South Africa, Wayne Visser, Ph.D. is, as CSRWire USA says, “. . . one of the most prolific, creative, and original thought leaders on corporate social responsibility.” That begs a question, however—should we use the term “social” or “sustainable?”

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.

QD: Integration on that level is a tall order for companies that might still be debating terminology.

WV: This is really the dilemma. We haven’t yet figured out business models or an industrial system that can act with the long term in mind. Although there are a few doing so successfully, for the vast majority of companies out there, the markets, and especially the financial analysts, will punish a company unless they are extremely focused on the short term. We know we have to shift business behavior to investing and thinking more long term, but how do we do that with markets that are so focused on short-term profits? One of the myths about sustainability is that it’s something you can do on the side—delegate it to a manager or department or committee and check the “done” box. We can learn a lesson from the quality movement. When we started out with quality there was an approach that treated quality as something separate, but we eventually we realized that quality is—and needs to be—embedded into everything. I think it’s very similar in the evolution of value creation and stakeholder management. I have a methodology that Chad Kymal and I have developed called Integrated Value that shows companies how to do this practically, by integrating on many different levels, from stakeholder needs and expectations to leadership goals development, down through risk assessment and opportunity or breakthrough analysis, to process analysis, and management systems alignment.

QD: Any other myths?

WV: Another myth is that the management systems approach that we’ve applied to sustainability is actually working. It may be a bit controversial to say, but even though we are seeing incremental changes by implementing those ISO-type systems, all the trends are massive, urgent, and still heading in the wrong direction. Whether you look at carbon footprints, inequality, loss of biodiversity, or our inability to effectively deal with corruption, something’s not working. I believe one of those things is the notion that a management systems approach will get us there. In a system where the managers set the goals, they can be as ambitious or unambitious as they like. Once a few have gone ahead of the pack and experimented and shown what’s possible and what a new, better standard should be, governments need to step in and say, “This is the new standard,” whether on emissions or human rights or whatever.

QD: Let me play devil’s advocate, then, and ask why sustainability is such a big responsibility for a company CEO?

WV: The global challenges that we face today have become more extreme and more interconnected. These concerns now affect companies. For instance, if you’re a company like Unilever and you’re not investing in a different kind of supply chain and sustainable agricultural resources, or if you’re Coca-Cola and you’re not investing in water—as they are now—and committing to water neutrality as a company, you won’t have a business in a few decades. I don’t believe that business leaders have suddenly had an altruistic “Damascus experience,” it’s just that the world has changed. Take General Electric as an example, and Jack Welch, who was very successful. Welch had quite a focused approach and that was very profit- and market success-driven. Now Jeff Immelt is very different. Immelt has bet the future of the company primarily in two areas—environmental clean technology and inclusive health technology. The reason he’s done that is not necessarily to be more ethical, but because the context has changed. All you have to do is look at what comes out of the World Economic Forum every year, in their global opportunities and risk reports. The world’s business leaders and NGO leaders are saying these are the sorts of issues that you have to deal with if you’re going to be successful today. The rules of the game have changed.

QD: It seems that companies are caught in a strange place between bending to consumer pressure for environmental improvement and being outed in corruption scandals. What’s the disconnect?

WV: Companies are usually stuck in one of four stages and they need to reach the fifth. Some are still defensive, which is all about risk and compliance; some are charitable; some are promotional; and some are strategic, which is about aligning the issues with their core business. Then, there are a few who are transformative, asking, “Can we change the rules so that those long-term sustainable behaviors are actually rewarded by the market?” That requires collaboration between companies within and across sectors and also requires a better policy environment. Another disconnect is that consumers will punish a company for getting it wrong—like BP or Volkswagen—but aren’t willing to pay more or be inconvenienced in any way. The best of the companies recognize that sentiment and see that addressing it is essential for their survival, so they just “bake in” sustainability instead of tacking it on.

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