Since the turn of the millennium there have been over 100 reports attempting to locate the business case for Corporate Social Responsibility. The latest research document called Sustainable Value (CR, Market Valuation and Measuring the Financial and Non-Financial Performance of the Firm) from the European Alliance for CSR, proposes the use of a Value Creation Framework. The aim is to provide such a framework to enable business to embed a commitment to sustainability across its operation at the same time as providing a tool for the investment community to refine their business valuation models. No small task then. 

Albert Einstein once said, "Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.", but even his magisterial wisdom is often lost when the lust for profit is all that counts. It's often difficult to persuade the mainstream investment community to think beyond the traditional narrow 'shareholder value' and its inherent short term nature. The specific environmental, social and governance (ESG) barriers highlighted for both companies and investors within the report are described as: limited or non-existent data suitable for cross-company comparison; lack of evidence for linking ESG performance with general performance; confusion of terminology and shifting definitions between actors; lack of incentives to present positive ESG impacts and disconnects between ESG specialists and Investor Relations experts within companies.

The summary of the report spells out some blindingly obvious conclusions including changing reward incentives and a change of time-frames. Ultimately, the findings focus on the need for innovative improved communication between investors and companies, which is no surprise but maybe taken for granted. In this case there is stronger understanding of a requirement for common language rather than attempting to translate back and forth. Should we be looking for a CSR Esperanto? Scary thought.

By its own admission, this report like many others offers no single 'silver bullet' answer but does provide additional credible, well researched ammunition to the ongoing debate. At a time when there are growing calls for radical change following the economic despair created by the financial markets, terms such as 'responsible capitalism' and 'values based capitalism' are generating increased exposure from companies, the investor community and now an even more cynical public. Corporate Social Responsibility continues to reinforce its position as an effective tool to enable ever increasing sustainability pressures to be productively managed by the private sector for those prepared to break from the old routine.

Is it a coincidence that the rise of Corporate Social Responsibility appears to mirror an increase in wider lower level stakeholder action and almost exponential growth in access to and distribution of information?

In a relatively short time period the explosion in mainstream grassroots awareness of business responsibility has been hard not to notice. It would be arrogant to consider this an effect of management capability as it is at least as much about individual enlightenment. Most of the people I have met have engaged in the agenda as a consequence of their own values, increased awareness of today's social and environmental issues and growing opportunities to actively make change happen.

You cannot underestimate the impact of social media on this level of awareness, and thus education. As Clay Shirky articulately presents on his TED Talks summary of historical revolutions in media, "we are all now both consumers and producers of information" he says. Thanks to platforms such as blogging, Twitter, Facebook, mobile telephones, etc. all individuals and groups can communicate in both directions simultaneously to their entire audience. Tomorrow's social media champions (and winning businesses) will be those most effectively filtering and exploiting these saturated information streams. Timberland only this week produced their online Q2 2009 CSR performance figures demonstrating greater stakeholder transparency and responsiveness.

Whilst Corporate Social Responsibility as an element of leadership development at the executive and board level has continued to improve at a steady pace, it is the surge at the bottom of the pyramid fuelled by such access to information that will be the key in the next evolutionary stage of the agenda's coming of age. The economic recession appears to have hit its nadir with increasing speculation of recovery on the distant horizon. Corporate Social Responsibility has survived well, a little battered maybe like everything else, but appearing to be enjoying much more productive media coverage than negative. As one corporate dinosaur steps off the top perch they are replaced by the conveyor belt that constantly produces younger if not always wiser business women and men of the future. One question is will this type of incremental change at the top be fast enough to adequately deal with our impending challenges such as climate change. The US Chamber of Commerce's stance on climate change is possibly saying not.

Corporate Social Responsibility is itself still learning and the number of engaged participants is growing every day. Education is at the core of making change happen, with social media providing an efficient vehicle for transporting the required information. Knowledge is only power when it is used.

In 2001 an ISO Committee started a feasibility study on standards for Corporate Social Responsibility in response to growing concerns about businesses social integrity. Eight years later, a five month balloting period has now begun for voting on the draft ISO 26000 with a view to fully publishing in late 2010. The aim is to provide 'harmonized, globally relevant guidance based on international consensus', and to 'so encourage the implementation of best practice in social responsibility worldwide'. It will not be a management standard and not intended to be used for certification purposes, more of a first steps to social responsibility, for all organisations, that is, all sizes and across all sectors. From a global perspective it has taken the very biggest picture approach ensuring strong consistency with all associated standards and existing guidance including, International Labour Organisation, UN Global Compact, OECD and many others (check out the Annex A for a full list) perspectives. Very comprehensive indeed, but what's the point of it all? Don't we already have enough guidance?

The difference is best emphasised by the comprehensive scope of the guidance. ISO 26000 aims to be as holistic as possible with no specific responsibility focus area. The seven core principles covered are respect for human rights; transparency; accountability; ethical behaviour; respect for stakeholder interests; respect for rule of law and respect for international norms of behaviour. If an organisation were to fully consider each of these seven principles it would be working beyond the majority understanding of terms such as Corporate Social Responsibility and Sustainable Development. In practical terms the guidance aims to complement existing tools as a reference document to provide clarity, continuity and better awareness.

I'm impressed by the tone and language used as it can be a tough topic to make truly accessible without sounding condescending, academic or intimidating. There are one or two rough edges including one statement saying 'In times of economic and financial crisis, organizations should not seek to reduce their activities related to social responsibility.' which simply sounds naive but then it is a draft document. Now that this document has hit the wider public audience there should be adequate feedback to keep ISO busy until the full launch in 2010, or later depending on how the received opinions are managed.

It will be very interesting to see the final draft of a social responsibility document that since its conception will have witnessed such dramatic events in the financial sectors, changes in environmental awareness, explosion of accessibility to information and the expectations of a growing ethical consumer base.

"More is better" is not sustainable. A new growth paradigm is needed for tomorrow's world.

The existing "More is Better" growth paradigm got us into much trouble, already - and it is not difficult to predict the outcome if this paradigm remains the mantra for businesses around the globe. Don't get me wrong; I don't object to growth. As stated in previous blog post, growth is a natural phenomenon. What's needed is a new growth paradigm that does not compromise sustainability - which does not destroy our world's habitat and resources.

In a sustainable business world, we need to shift away from money as the key growth measure. The triple bottom line approach attempts to accomplish that: people, planet and profit instead of profit alone. But how do we get there in a culture where money is the driving force? What's the pathway to get to this new paradigm?

I believe we must start on a personal level - everything starts with the individual (see "CSR 2.0 - It's time to make this work!"). This is not to say that government policies and board decisions are not important - I believe they are. But breaking away from the existing mindset of "More is Better" is not done by making different decisions within an existing paradigm. It doesn't help a caterpillar to eat different food if it wants to avoid transforming into a butterfly. Our world demands a paradigm shift - a transformation, just like at some point in time, the caterpillar's has to transform into a butterfly.

I believe that we can walk this transformational path by replacing "maximizing financial growth" of an organization with "maximizing the expression of its core values and its contribution to a bigger purpose". Patagonia, for example, one of the leading companies in the world when it comes to sustainable business practices, has always adhered to these principles. Numerous times, Patagonia was faced with bankruptcy, and even in these moments, the board made critical business decisions that were not based on financial rewards, but on its core values of preserving the earth's natural resources, and to "use business to inspire and implement solutions to the environmental crisis". In the mid 90's Patagonia made a decision to only use organic cotton for its clothes; at a time when not even enough organic cotton was produced to supply Patagonia's needs. When the board made the decision, Patagonia was already in financial distress, and jeopardizing the clothes production would send Patagonia to the edge of bankruptcy - if not over it. And yet, the board decided to move all production to organic cotton. It turned out that this bold move did not only birth the organic cotton industry (according to a study commissioned by Patagonia, traditional cotton growth was highly pollutant), it provided Patagonia with a leading market position as well as access to group of loyal customers that supported Patagonia's values.

Is shifting to the new growth paradigm that simple?

Yes and no. Yes, because expressing our values and contributing to a bigger purpose always has a betterment of society at large at its core. The final outcome is positive. The traditional growth paradigm of "More is better" on the other hand strives for growth at all cost - and usually it comes with the high cost of unsustainable behaviors and business practices. However, once we decide to follow the new growth paradigm, we soon find that it is not that simple after all. It requires authenticity, because otherwise we are lying to ourselves and the people around us. It requires, integrity, because we cannot walk this path half way. And lastly, it requires courage, because as we make decisions based on our values and a higher purpose, we will soon find that we are challenged with our inner demons, such as fear or anxiety, just like Patagonia's Yvon Chouinard when he put his firm on the line with the decision to move to organic cotton.

The existing growth paradigm of "More is better" does notwork in a sustainable world. Organizations aiming to thrive as sustainable players need to rethink their growth strategy.

Is it possible to grow organizations without increasing their ecological footprint? Is growth necessary in the first place? Today's growth paradigm of "More is better", which is interwoven into our culture's fabric, educational systems and daily behaviors, cannot sustain our world's fast growing population. It is just a matter of time before we are hitting a wall.

Assessing our current business environment, the problem seems obvious: Companies who don't grow stagnate - at least through the eyes of Wall Street's. They are simply not interesting to the average investor. As a result they lose the direct competitive advantage provided by access to capital. Upon closer examination, however, the drivers for business growth are not that obvious. After all, it is every one of us that keeps Wall Street going. It's our investment capital, our dollars that cast the vote.

In fact, most of today's business and material growth is not driven by the belief that "More is Better". It is driven by our anticipation what happens if growth is missing. In essence, our drive for growth is driven by the following 3 beliefs: I have to manipulate a future outcome (e.g. I have to make enough money so my business or I will be safe in the future), I have to manipulate what others think about me (e.g. I am buying a big car, or am building a powerful company so others think highly of me), and I have to avoid future pain (e.g. so I don't need to do deal with all the nuisances of running short of money).

It is easy to see that each of these drivers does not only creating environmental havoc; they also create stress and exhaustion, resulting in an unsustainable lifestyle. The "More is Better" concept is an element of what we call the model of Dominance & Subservience, upon which most of today's organizations are built (see previous blog about the Dominance & Sustainability model): we create an unsustainable environment in our attempt to dominate the resources that guarantee our survival, such as land, money, or other natural resources.

Remains the question: Is growth necessary - or even possible - in a sustainable world?

Growth is not only one of the 6 fundamental human needs (certainty, variety, significance, connection, growth, contribution), it is also one of the most naturally occurring phenomena in nature. Every plant and every creature goes through the phases of inception, growth, decay and annihilation. The problem we are facing is that although we are all excited about inception and growth, decay and annihilation scares our pants off. We keep relationships alive long after the love has gone. We keep our jobs long after they provide us with true inspiration and fulfillment. We keep companies afloat long after they have lost their mission. We push energy and expend resources to keep old structures alive, although many indicators signal that they are ready for a transformation - not necessarily death, but a transformation to a new growth phase.

Therefore, the question is not whether growth is necessary, but which growth is necessary? And is it possible to build "successful" organizations with this new growth paradigm?

To preempt an answer: In order to redefine growth in a sustainable world, we need to shift from money as a key measure to values and contribution. One example is Patagonia, one of the world's leading models for sustainable business practices. Patagonia's focus is not to maximize financial growth, but to maximize the expression of its core values, and to contribute to a bigger purpose. Although competing in a tough market, Patagonia has become a movement rather than an ordinary business, a preferred provider of goods for a trusted customer base - financially successful, but growing in purpose and contribution.

More in the next post…

This week's SoCap09 conference will serve again this year as Ground Zero for 800-plus social entrepreneurs in the world who are bent on using social media to invent a new economy -- one that's focused more directly on global problem-solving. "Americans are hungry to engage," says Jonathan Greenblatt, a SoCap presenter and president of All for Good, an open source platform that exists to press more people into service.

Greenblatt says we're living in a moment when social networking is evolving into mobilization, and brands are becoming increasingly focused on doing right by their customers' social networks. To be sure, many SoCap attendees heading for San Francisco this week believe there is, already, a new "economy of integrity" in the making -- fueled by social media. "This new economy is like shoots growing out of the ground," Greenblatt says. "It's giving us different answers than the ones we've heard before to the questions we are facing" as a society.

Think Zipcar, Greenblatt says -- the Netflix for cars. Or Living Homes, a Los Angeles-based construction business that's building homes that generate more power than they consume. Or Tom's Shoes, which will donate a pair of shoes to someone in need for every pair purchased. Or Revolution Foods, which is offering healthier meals to kids around the nation as an alternative to junk food in public schools. "This new economy of integrity is animated by these ethical brands driving values and creating values, and social media will allow this economy of integrity to take off," Greenblatt says. Social media, he says, will both "cohere this moment of opportunity and catalyze it...We have opportunities before us that were never before possible."

The biggest driver of this shift from social networking to mobilization, though, is not simply commerce -- nor even altruism. Historians and futurists suggest it's more about our increasing discomfort with the mass proximity we may now feel to communities and classes of people that previously lived outside our direct spheres of experience, knowledge, or influence. Thanks to social media, says Greenblatt, the old buffer zones that used to divide us are shrinking -- fast. "We have never been nor felt so adjacent to others," he told a group of online activists Friday at Mashable's Summer of Social Good Conference in Manhattan. With mass globalization, we can see the same brands being advertised in central Dubai as in Manhattan; our closest neighbors are more likely now to be found online, everything can be googled, and we have never been so mobile. "There is more computing power in our Blackberries than there was in the control room in Houston that put a man on the moon," Greenblatt says.

All of this, of course, presents both opportunity and burden. "In a networked world where everyone is adjacent and everything can be known, we are seeing increasing evidence of the inequities around us," Greenblatt says. "When you are actually adjacent to these people -- the have-nots; when they know what we have -- it puts a burden on the 'haves' [in society]."

Indeed, says Greenblatt and others, we are compelled to invent new alternatives. Futurist Mark Pesce predicts a dangerous time ahead, with new, Web-strong "adhocracies" working to erode, like sand against limestone, our traditional systems and institutions. Greenblatt and others, like Scott Henderson of Media Sauce, see this new era of mobilization in terms of altruistic swarms. "When you have the ability to shine a bright light on a cause, you are also going to create higher levels of expectations by people for more intimacy and immediacy and higher velocities for change," Henderson said Friday at the Mashable event. "Twestival? What was that but a self-organized swarm? It's just the beginning." Meanwhile, new media leaders, including Clay Shirky, say new forms of management will be needed to weather the changes.

Adds Greenblatt: "Social media is not just about reading a story online and deciding whether to reddit or propeller it or digg it. This is noise. Noise. For me, social media is Wikipedia, with 10 million members all across the planet with a mission to be the repository of human knowledge, accessible to every person alive. It's Twitter and what happened in Iran. Did Twitter change the course of that election? Maybe not. But far more significantly, it changed forever how Iranians think of themselves. Twitter didn't change the outcome now... But it will."

For more on SoCap, check out this interview with Kevin Jones, a co-founder of the conference, which runs September 1-3. To follow SoCap on Twitter, the hashtag is #SOCAP09.

Even after the economy bounces back, business won't go back to normal. A new leadership model is required to grow companies sustainably.

If we think that we can sit back in our chairs and relax after the financial crisis is over, we are in for a surprise. Globalization, climate change, increasing government intervention and political instabilities will not go away after the economy bounces back. On the contrary: organizations will be exposed to a completely new set of problems, which most leaders have never learned how to deal with in business school. According to IBM's Global CEO Study, companies will be challenged to continuously change and innovate - all the while creating a business culture that is genuine and authentic.

Driven by continuous change and uncertainty, future challenge for leaders will not be to solve operational or process issues, but to address personal and emotional issues in the team. Tomorrow's problems reside between people's ears and, as the current rates of resignation, disengagement and frustration (e.g. Corporate Leadership Council figures) shows, existing leadership approaches are failing. Default measures, such as short term fixes, tighter controls, restructuring and cost cutting, cannot address the challenges of the next decade, because they lead to frustration and fear in the team.

To create the adaptability necessary to meet the relentless chain of challenges is beyond common business practice and expertise. Leaders who want to create sustainable organizations using existing leadership models are risking failure. What's needed is to build the capacity inside the organization to address the coming challenges. In many cases, this requires a change in the company's DNA: just like the ability of every cell in our body fighting a virus, organizations need to tap into the creative abilities of every employee. This in turn requires that every employee has the mindset of a leader: awareness of what the company needs, the ability to gather the necessary resources, and the chutzpah to initiate action without sign-off from the top.

As stated in a recent Harvard Business Review article: "Executive must use their leadership abilities to generate more leadership deep in the organization".

Yet, we should not view social enterprise as a magic bullet. The financial institutions located in high-poverty communities may not be a good fit for this type of enterprise. . . .

Social enterprise also does not remove the need for other safety net programs. Most social enterprise cannot provide the health care, access to affordable housing, child care, quality education, and transportation resources necessary for low-income families to weather temporary economic setbacks or achieve permanently higher economic trajectories. Moreover, many startup businesses fail or fail to generate significant income, which leaves the owners and workers economically vulnerable. Even with more entrepreneurial approaches in place, there remains a need and a role for the public safety net to help working poor families overcome barriers to employment and well-being.

These concerns, however, do not outweigh the potential impact of social entrepreneurship. Social enterprise should be a prominent tool in any community's antipoverty toolkit. Instead, we should be asking ourselves whether we are training the next generation of nonprofit leaders, social workers, and policy experts to think not just about creative entrepreneurial solutions, but how they fit within and strengthen the existing safety net.

On Wednesday night in London, I had the opportunity to meet some of the brains behind the Unilever operation, and hear about the launch of their Cleaner Planet Plan. The Plan corresponds to improving laundry-related manufacturing processes, R&D, and consumer behaviour for brands such as Persil.

After an illustrative presentation that highlighted the changes they've made (including introducing 'Small and Mighty,' which saved 70 million litres of water in its first year, not to mention decreasing CO₂ production), I had a chance to speak to the passionate and committed Keith Rutherford, Unilever's Global Programme Director, Sustainability and Operational Excellence, in addition to Laundry R&D.

From Keith, I learned that Unilever's approach is well thought out and quite scientific - the company has worked diligently to master the ever-complex problem of measuring social and environmental impact. Karen Hamilton, VP of Vitality, mentioned that their company-wide challenge involved measuring impacts across a multitude of products, from deodorants to teas to laundry detergents. Unilever has used lifecycle analysis and brand imprint processes to meet this challenge, and Karen smiled appreciatively at Keith, commenting that Laundry is their shining star.

With around 125 billion washes happening each year with Unilever products, many small changes in consumer behaviour are made scalable, resulting in significant and sustainable improvements. Since 1995, these changes have translated into a 44% reduction in greenhouse gas emissions in the manufacturing process, a 70% reduction in waste, and a 76% reduction in water waste.

While Unilever recognized that there is always more work to be done in the area of sustainability and that as a business, they of course must consider economic impacts along with environmental and social, the people I met were genuinely excited about what they have accomplished, and I think that they should be. The corporation not only partners with non-profits like Forum for the Future, but they also compare notes with other large companies such as M&S in order to benchmark their sustainability practices and look for ways to improve. Now I know that corporations like Unilever have their fair share of dirty laundry, but when it comes to cultivating the drive, energy and enthusiasm for creating scalable change through its global reach, I think Unilever is onto something here.