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Corporate Responsibility Coalitions: The Past, Present, and Future of Alliances for Sustainable Capitalism

Corporate Responsibility Coalitions: The Past, Present, and Future of Alliances for Sustainable Capitalism

by David Grayson, Jane Nelson

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It is estimated that there are more than 110 national and international business-led corporate responsibility coalitions. Given the growing reach and significance of these alliances, there is now a critical need for an informed and balanced analysis of their achievements, their progress, and their potential.

In Corporate Responsibility Coalitions, the


It is estimated that there are more than 110 national and international business-led corporate responsibility coalitions. Given the growing reach and significance of these alliances, there is now a critical need for an informed and balanced analysis of their achievements, their progress, and their potential.

In Corporate Responsibility Coalitions, the first book to chronicle the subject, David Grayson and Jane Nelson explore the past, present, and future of these coalitions. They consider the emergence of new models of collective corporate action over the past four decades; the increasing number of these coalitions, their diversity and complexity; and how they network with each other and a broader set of institutions that promote sustainable capitalism. Drawing on their global study, the authors light the way for the future development of these influential alliances. In addition, they provide in-depth profiles of the most strategic, effective, and long-standing coalitions.

Editorial Reviews

From the Publisher
"David Grayson and Jane Nelson tell a story that too few know: the story of corporate-lead coalitions and the role that they play a in redefining business in society. It is a story of social innovation at its best. Understanding these powerful coalitions and learning as much as we can from them will be essential to creating a more sustainable world."—Cheryl Y. Kiser, Executive Director, The Lewis Institute & Babson Social Innovation Lab, Babson College
Babson College - Cheryl Y. Kiser
"David Grayson and Jane Nelson tell a story that too few know: the story of corporate-lead coalitions and the role that they play a in redefining business in society. It is a story of social innovation at its best. Understanding these powerful coalitions and learning as much as we can from them will be essential to creating a more sustainable world."

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Stanford University Press
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Corporate Responsibility Coalitions

The Past, Present, and Future of Alliances for Sustainable Capitalism

By David Grayson, Jane Nelson


Copyright © 2013 Greenleaf Publishing Limited
All rights reserved.
ISBN: 978-0-8047-8710-9


The rise of the corporate responsibility movement

Corporate responsibility – in sum, the approaches that companies employ to embed environmental, social and governance (ESG) risks and opportunities into their core business strategies and operations with the aim of either protecting or creating shared value for business and society – is increasingly recognized as a fact of business life.

A 2010 Accenture study found that 93% of more than 750 CEOs surveyed globally believed that sustainability is critical to their future business success, and 96% said sustainability has to be embedded in business strategy and operations. McKinsey, in its 2011 sustainability survey, reported that more than 70% of over 3,200 company respondents from a range of industry sectors across the world said that sustainability is either a top three or priority item on the CEO's global agenda. Also in 2011, KPMG found that 95% of the world's 250 largest companies report on corporate responsibility, concluding that corporate reporting on ESG performance is now de facto law in some countries. An academic study by Kolodinsky et al. in 2010 found that 90% of Fortune 500 firms embraced corporate social responsibility as an essential element in their organizational goals.

The underlying drivers of corporate responsibility over the past three decades have been well documented. The ESG performance of business has become a more important issue as the processes of economic liberalization, privatization, globalization and technological transformation have opened up markets around the world and expanded the reach, scope and influence of the private sector, especially that of multinational corporations, whose numbers, according to UNCTAD, have grown from circa 60,000 in 2000 to over 80,000 today. As David Rothkopf points out in Power Inc., over the last few decades, the world's largest private-sector organizations have grown dramatically in resources, global reach and influence:

The world's largest company, Wal-Mart Stores Inc., has revenues higher than the GDPs of all but 25 of the world's countries. Its employees (2.1 million) outnumber the populations of almost a hundred nations. The world's largest asset manager, a comparatively low-profile New York company called BlackRock, controls assets greater than the national reserves of any country on the planet.

Simultaneously, the dramatic growth of information and communications technology and social media has enabled many more people around the world to learn about what is happening in previously remote locations or to become aware of issues that were known or noticed locally at best. It also means that these newly aware citizens can rapidly and effectively organize online campaigns against corporate behavior of which they disapprove. The continued growth of social media will only intensify the potential for viral campaigns against business misbehavior.

Corporate governance and ethics scandals and the global financial crisis have further undermined trust in business, especially in large corporations. As the Edelman Trust Barometer has tracked during 12 years of annual surveys, the corporate sector has a large, and growing, trust deficit to overcome in many countries. It also has to meet a large gap in expectations. GlobeScan – an international center for objective survey research and strategic counsel – has, since 2000, tracked the gap between popular views about how business should behave on corporate social responsibility issues and perceptions of how business is behaving. As Figure 1.1 illustrates, the private sector is failing to meet public expectations.

Underpinning all these trends has been growing evidence of climate change and natural resource depletion, and the role of business in exacerbating or addressing these challenges. The International Food Policy Research Institute has estimated that the demand for water will have increased by 30% by 2030 and that some two-thirds of watersheds will be stressed. The UN's Food and Agriculture Organization estimates that food demand will have increased by 50% by 2030, while the International Energy Association predicts that demand for energy will have also increased by 50% by the same period.

As the McKinsey Global Institute noted in its seminal report of 2011, The Resource Revolution:

The size of today's challenge should not be underestimated; nor should the obstacles to diffusing more resource-efficient technologies throughout the global economy. The next 20 years appear likely to be quite different from the resource-related shocks that have periodically erupted in history. Up to three billion more middle class consumers will emerge in the next 20 years compared with 1.8 billion today, driving up demand for a range of different resources. This soaring demand will occur at a time when finding new sources of supply and extracting them is becoming increasingly challenging and expensive, notwithstanding technological improvement in the main resource sectors. Compounding the challenge are stronger links between resources, which increase the risk that shortages and price changes in one resource can rapidly spread to others. The deterioration in the environment, itself driven by growth in resource consumption, also appears to be increasing the vulnerability of resource supply systems ... Finally, concern is growing that a large share of the global population lacks access to basic needs such as energy, water, and food, not least due to the rapid diffusion of technologies such as mobile phones to low-income consumers, which has increased their political voice and demonstrated the potential to provide universal access to basic services.

The combination of growing demand, increased resource scarcity, volatility and risk, and stronger links and feedback loops between certain critical resources (increasingly referred to as the energy–food–water nexus) is putting growing pressures on ecosystems, social systems, economic systems and political systems. This has led to consequent demands, including from business itself, for more concerted and systemic efforts to improve water, energy and food security, and to achieve sustainable development more broadly. Research by McKinsey and others has "established that both an increase in the supply of resources and a step change in the productivity of how resources are extracted, converted and used would be required to head off potential resource constraints over the next 20 years." New models of corporate responsibility and sustainability will be essential to achieving this step change, alongside and within an enabling framework of better government policies.

At the same time, the economic and human costs of the global financial crisis, high levels of unemployment and growing inequality of opportunity in many nations have added further pressure on the private sector to help address broader socioeconomic issues. The International Labour Organization (ILO) World of Work Report 2012 states that "more than 200 million workers will be unemployed in 2012," with some 50 million jobs having been lost since the financial crisis began in 2008. According to the ILO's Global Employment Trends 2012 report: "The world faces the 'urgent challenge' of creating 600 million productive jobs over the next decade to generate sustainable growth and maintain social cohesion." The ILO estimates that one out of every three workers in the world is classified as unemployed or poor, and argues that young people and the low-skilled are bearing the brunt of the jobs crisis. Young people are three times more likely to be unemployed than adults and over 75 million youth worldwide are looking for work. The ILO warns of a "scarred" generation of young workers facing a dangerous mix of high unemployment, increased inactivity and precarious work in developed countries, as well as persistently high working poverty in the developing world. Growing inequality is also a problem in many countries. In the United States, the share of national income going to the upper 1% more than doubled from 1979 to 2012, from about 10% to about 23.5%. According to the Economic Mobility Project of the Pew Charitable Trusts, only one-third of American families will surpass their parents in wealth and income and climb to a new rung on the economic ladder. Similar patterns of high unemployment and declining equality of opportunity are being repeated elsewhere and they put increasing pressure on the private sector to play a more proactive role in working with governments to find solutions.

Another important driver of corporate responsibility over the past decade has been a growing focus on the responsibilities of business, especially large corporations, in relation to human rights. In 2005, following a series of well-documented cases of companies being responsible for or complicit in human rights abuses, the former UN Secretary-General, Kofi Annan, appointed Professor John Ruggie to serve as his Special Representative on Business and Human Rights. This was the first time in the history of the United Nations that such an appointment had been made to focus specifically on the role of the private sector. In 2008, after three years of extensive research and wide-ranging consultations around the world with governments, business associations, companies and civil-society organizations, Professor Ruggie proposed a framework to clarify the relevant actors' responsibilities in relation to human rights.

This framework, now referred to as the UN Framework on Business and Human Rights, and popularly called the "Protect, Respect, Remedy" Framework, was unanimously welcomed by the UN Human Rights Council. It rests on three pillars: the state duty to protect against human rights abuses by third parties, including business, through appropriate policies, regulation and adjudication; the corporate responsibility to respect human rights, which means to act with due diligence to avoid infringing on the rights of others and to address adverse impacts that occur; and greater access by victims to effective remedy, both judicial and non-judicial.

The Special Representative's mandate was extended until 2011 to develop more operational guidance on how to implement the Framework, and in June 2011 the UN Guiding Principles were unanimously endorsed by the Human Rights Council. Professor Ruggie notes:

we now have for the first time a common framework and set of normative standards with regard to business and human rights that have been unanimously endorsed by the Human Rights Council. This includes not only Western countries but also Brazil, China, India, Nigeria, Russia and every other of the 47 countries represented on the Council. The endorsement of the Guiding Principles was quite exceptional. It was the first time that the Human Rights Council or its predecessor had ever used the verb "endorse" in relation to a normative text that governments did not negotiate themselves. Furthermore, the "Corporate Responsibility to Respect Human Rights" component has been incorporated into the new OECD's Guidelines for Multinational Enterprises, which have a complaints mechanism. It has been referenced by the International Finance Corporation, which affects access to capital. The International Organization for Standardization (ISO) recapitulates its core features in ISO 26000, and it has a whole industry of consultants behind it who are eager to help companies become certified that they operate in a socially responsible manner. The Guiding Principles are also included in the new European Union corporate responsibility strategy. All of this makes the Guiding Principles the most authoritative global standard in business and human rights.

As a result of these developments and the growing global role and influence of the corporate sector, corporate responsibility is moving from the margins of corporate strategy and public policy to the mainstream. In some cases, this shift is being driven by changing societal expectations of business and by low trust in the private sector. In others, it is driven by companies themselves identifying new strategic risks and opportunities associated with fundamental shifts in economic, social, political, technical and environmental systems. For most industries and individual companies a combination of factors is usually at play. While very few companies have fully integrated these issues into mainstream strategy and planning, most of the world's largest corporations are now paying greater attention to what corporate responsibility means for their core business far beyond traditional philanthropy and compliance. It is increasingly clear that this trend is not a short-term fad, nor is it only a Western trend. While much of the early running on corporate responsibility was made by Western organizations, the first corporate responsibility coalitions were in Africa, Asia and South America, and in recent years there has been a growing exploration of the responsibilities and roles of business in societies around the world.

Debate about the role of business and how business people should behave has also been integral to each of the great religious and philosophical traditions. Islam teaches the importance of trading with integrity and zakat (giving back); Judaism teaches about tzedek – fairness and justice in transactions – and tikkun olam (repair the world); and Confucianism emphasizes the importance of all contributing to the "harmonious society." Christian doctrine inspired some of the great 19th-century Quaker businesses in Britain such as Cadbury and Rowntree. Today, there are more explicit connections between corporate responsibility theory and what the great religious, philosophical and spiritual traditions say about the role of business in society, in different parts of the world, and hopefully a growing recognition of the opportunity to learn from each other's approaches.

Another key element of the emerging corporate responsibility movement has been efforts to put more rigor into measuring both the business benefits and the societal benefits of better environmental, social and economic performance. We have written elsewhere of the importance of corporate responsibility for individual businesses and business collectively, as well as for governments and society (the public good). From a business perspective, properly conceived and well-executed responsible business can improve long-term value creation through:

1. Brand value and reputation

2. Employees and future workforce recruitment, retention and motivation

3. Operational effectiveness through better cost management, resource efficiency and productivity in the value chain

4. Enterprise and project-level risk management

5. Organizational growth

6. Business opportunity and competitiveness through the potential either to innovate and develop new products, services and markets or to enter new markets with existing products and services

As well as being a driver for commercial risk management and innovation, corporate responsibility can also be a stimulus to social- and public-policy innovation, anticipating, obviating or complementing regulation, and as part of the redesign and delivery of "public goods." It can also help to support national progress and sustainable development through a number of direct impacts and indirect multiplier effects. Research by the International Business Leaders Forum (IBLF) identified five potential contributions of companies that are focused on adding value for both shareholders and society. These are shown in Table 1.1.

In summary, the corporate responsibility movement has been gaining both momentum and traction over the past few decades. This trend is likely to continue as awareness grows among companies and other actors that business has both the opportunity and the responsibility to create new shared value and protect existing value through the way companies integrate social and environmental risks and opportunities into their core business. Although corporate philanthropy continues to have a role, as we have argued elsewhere, corporate responsibility is first and foremost about "how companies make their profits, not simply what they do with them afterwards."

The evolving corporate responsibility movement has been driven by two broad sets of actors: those within the business community itself; as well as key stakeholders beyond the business community, such as governments, investors, NGOs, academic institutions and foundations. These actors are summarized in Figure 1.2.


Excerpted from Corporate Responsibility Coalitions by David Grayson, Jane Nelson. Copyright © 2013 Greenleaf Publishing Limited. Excerpted by permission of STANFORD UNIVERSITY PRESS.
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Meet the Author

David Grayson is Director of the Doughty Centre for Corporate Responsibility at Cranfield University. He is a Contributing Editor to The Corporate Citizenship Briefing (www.ccbriefing.co.uk) and a regular columnist for The Ethical Corporation (www.ethicalcorp.com). Jane Nelson is Director of Harvard Kennedy School's Corporate Social Responsibility Initiative, a nonresident Senior Fellow at the Brookings Institution, and a Senior Associate of Cambridge University's Programme for Sustainability Leadership.

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