Corporate Social Responsibility: the role of the Public Sector and the future direction of sustainable development

The business case for Corporate Social Responsibility (CSR) is undeniable – the drivers for companies to act ethically and with integrity is now crucial for their reputations when dealing with informed employees, consumers, communities, investors and other stakeholders. The direct benefits of CSR are many, and it is shown to drive innovation, foster trust and transparency, boost long-term profitability, ensure competitiveness, and engage the workforce. Responsible business is an approach and business mind-set that is here to stay, and leading Irish businesses wish to be leaders in sustainability practice.

While corporate responsibility is a voluntary management approach by business, the public sector has a significant impact on CSR. The public sector plays a critical role in creating an enabling environment for responsible business to thrive. An enabling environment is one that encourages business activity that minimises environmental and/or social costs and impacts, while at the same time maintaining or maximising economic gains. Public policy in a wide range of areas impacts on CSR and businesses ambitions e.g. the environment, labour markets, community development, human rights, anti-corruption, and governance reporting.

 

The Irish Government recognises its role. In July, An Tánaiste launched our second National Action Plan on CSR, Towards Responsible Business^[i]. A Stakeholder Forum, drawn from public and private sectors, was convened to drive action and implementation of the Plan. In her Foreword to the Plan, An Tánaiste stated that

“The Government will continue to champion responsible business practices across all sectors and encourage enterprises to transform the way in which they impact on the marketplace, the workplace, the community and the environment. By working together we will create a business environment that is comprehensively sustainable and a brighter future for all.”^[ii]

This Action Plan builds on the first plan, Good for Business, Good for Community (2014-2016)^[iii], which clearly outlined that the public sector has a number of distinct roles to play in the CSR agenda, including:

• endorsing and supporting the concept of CSR in enterprises;
• adhering to good CSR practice in its own operations; and
• relevant regulatory roles.

There are many public policy options for the Government to consider, and research by the UN Global Compact & Bertelsmann Stiftung identified these as:

• Awareness-raising efforts to create a shared understanding of corporate responsibility among companies and the broader public, including what business can do to implement it e.g. award schemes, information platforms, campaigns, training and capacity building measures, disclosure of payments to public institutions, naming poor performers, and toolkits.
• Partnerships designed to create win-win situations in which various stakeholders work collectively toward a shared goal e.g. Multi-stakeholder involvement, public-private partnerships, and collective action efforts.
• Soft law approaches that promote and incentivise voluntary action by business as a complement to state regulation e.g. codes of conduct, implementation of international principles, guidelines for CR reporting, linking CR aspects to public procurement procedures and export credit boards.
• Mandating instruments that allow governments to monitor and enforce corporate accountability e.g. company laws, regulations for pension funds, stock exchange regulations, laws on CR reporting, penalties for non-compliance.^[iv]

From an EU perspective, corporate responsibility features prominently as part of the EU’s Europe 2020 strategy for smart, sustainable and inclusive growth. Key CR public policy issues at the European level include:

• Enforcing the reporting and disclosure of environmental, social and governance information with the Directive on non-financial report transposed into Irish company law in July;
• Supporting and influencing various international instruments, such as the UN Global Compact, the OECD Guidelines for Multinational Enterprises, and the ISO standard on social responsibility; and
• Promoting business and human rights in line with the principles promoted by the UN Secretary-General’s Special Representative on business and human rights.^[v]

Many governments are increasingly supportive of international standards; in 2001, the ISO (International Organisation for Standardisation) developed an International Standard providing guidelines for social responsibility^[vi]. The resulting ISO 26000 aims to develop an international consensus on what CSR means and which CSR issues organisations need to address. It seeks to encourage voluntary commitment to social responsibility among all types of organisations from the private, civil society and public sectors.

In response to such international developments, Business in the Community Ireland (BITCI), in partnership with the National Standards Authority of Ireland (NSAI), launched the Business Working Responsibly Mark^[vii], a standard based on the ISO 26000. Presently, 25 of Ireland’s leading businesses have achieved the standard, and many others use the framework within their sustainability strategies and management. Upon attaining the Mark, Chris Martin, Group CEO of Musgrave Group stated that,

“The achievement of the Mark demonstrates that our commitment to sustainability is at the core of our approach to business”.

 

Internationally, the agenda of CSR was given new impetus and momentum by the UN Sustainable Development Goals, and their attainment will call for enhanced partnership between the public and private sectors. The Goals state that,

“Private business activity, investment and innovation are major drivers of productivity, inclusive economic growth and job creation. We acknowledge the diversity of the private sector, ranging from micro-enterprises to cooperatives to multinationals. We call upon all businesses to apply their creativity and innovation to solving sustainable development challenges”.^[viii]

While ultimately it is governments who are being asked to deliver the Goals, the simple fact is that this critical agenda cannot be realised without effective engagement by the private sector. The Global Goals present Irish businesses with a new framework that will inform the design, delivery and communication of their sustainable and responsible business practices. Irish business needs to have articulated position on the Global Goals as stakeholders (be they government, customers, employees, civil society) will increasingly demand it.

Professor Jeffrey Sachs’ address at the BITCI CEO Breakfast in October 2016 very clearly stated businesses’ central role to sustainable development, and noted that Ireland needs to lead on this agenda if we are to have a resilient, inclusive economy and society.^[ix] At a European level, the Commission remains committed to the Goals, and aims to support the move to new business models and finance mechanisms for their achievement. The “Next steps for a sustainable European future European action for sustainability” (November 2016)^[x] notes that

“action on Corporate Social Responsibility (will) help to address the challenges of work in the 21st century as required by the SDG … The Commission will intensify its work on Responsible Business Conduct, focusing on concrete actions to meet current and future social, environmental and governance challenges, building upon the main principles and policy approach identified in the Commission’s 2011 EU Corporate Social Responsibility Strategy.”

 

First Vice President of the Commission, Frans Timmerman, is establishing an EU Multi-Stakeholder Platform to monitor the progress of the Goals. This platform will provide a peer-learning hub where stakeholders can engage in debates about sustainability activities and inform others about on-going successful initiatives. In complement to this, the Commission emphasise the need to move to a circular economy to support the ambitions of the Goals, and the central role of sustainable production and consumption models as a necessary priority for business. The Commission has produced a range of policy papers that will influence Ireland’s business environment over time.

This emphasis on the Goals at a European level is echoed by the engagement of the World Business Council for Sustainable Development (WBCSD), a CEO-led international business network. The WBCSD was a key business actor participating in the UN high-level political forum on sustainable development which was held in July in New York. The second annual SDG Business Forum took place as part of this programme, and was focused on private sector investment and fostering robust dialogue between governments and the private sector on the way forward. As a Global Partner with WBCSD, BITC receives update reports and seeks to transfer the insights to Irish business.

The WBCSD is active in generating CEO discussions on the Goals, and in March they released their CEO Guide to the SDGs. BITCI was part of the coalition on the paper published by European Global Network Partners entitled “An Inspirational View for a Sustainable Economy in Europe”^[xi]. This paper encourages European governments and the EU Commission to embrace the Goals, and positions business as a critical solutions provider in this field.

A key message for Irish business is that the Goals are not just a framework for strategy development, but are a driver of innovation and opportunity. This ‘opportunity-based’ framing is articulated in the Better Business, Better World report led by the Business & Sustainable Development Commission. This report identifies four systems to achieve the Goals – food and agriculture; cities; energy and materials; and health and well-being – and estimates that they are worth more than US$12 trillion annually for the private sector in 2030 (representing 10% of forecasted global output in that year). The report estimates that the investment required to achieve these opportunities is around US$4 trillion per year, and identifies 60 market opportunities that could generate almost 380 million jobs.

However, barriers to business engagement clearly exist. A study by Frost & Sullivan/GlobeScan on behalf of CSR Europe demonstrates that while the Goals have already been embraced by many business leaders, middle-management remains disconnected from their narrative.^[xii] The Goals are being embraced by business leaders and sustainability professionals but a lack of collaboration with other areas of the business is stunting progress. The barriers to engagement are the complexity of the Goals, and their perception as a “hard sell”, together with being viewed as “overload” for business with perceived costs.

Irish business needs to actively assess and manage the risks and opportunities presented by attaining the Sustainable Development Goals. Irish business will be the engine of employment, the provider of technology and innovation, and a critical source of finance to achieve the vision of the Goals in Ireland and beyond.

The public sector has a fundamental role to play in both fostering and supporting this agenda, and we are still in the early stages of knowing what interventions will be most effective.

 

Notes

---

^[i] Full Policy Paper available here.

^[ii] Towards Responsible Business, pg 4, available here.

^[iii] “Good for Business, Good for Community”, available here.

^[iv] “The Role of Governments in Promoting Corporate Responsibility and private Sector Engagement in Development”, available here.

^[v] EU 2020 Documents, available here.

^[vi] ISO 26000, available here.

^[vii] For more information, see here.

^[viii] “Transforming our world: the 2030 Agenda for Sustainable Development”, available here.

^[ix] Watch Prof. Sachs’ address here.

^[x] Available in multiple languages, here.

^[xi] Paper available here.

^[xii] “The Sustainable Development Goals (SDGs): The Value for Europe”, available here.