Business Behavior
Corporate Responsibility

Responsible Corporations vs. Corporate Responsibility

Burgess COMMENTARY

Peter Burgess

Responsible Corporations vs. Corporate Responsibility

whats-the-difference ... It’s a small difference linguistically, but substantively, a serious division exists between the terms ‘responsible corporations’ and ‘corporate responsibility’.

On July 9, Paul Tsaparis wrote an engaging piece for the Globe and Mail that spoke to the importance of 21st Century businesses embracing the pursuit of triple-bottom-line (people, planet, profit [PPP]) success. I believe Mr. Tsaparis is spot-on in his assessment of the value in this more holistic, long-view approach to our market economy. There are two points, however, that I would like Paul to consider more fully:

#1: It matters which comes first: the ‘responsibility’ or the ‘corporation’.

#2: Good intentions/good marketing are not good enough.

Corporate Social Responsibility (CSR) has been on the scene within most major organizations for the better part of two decades now. Hell, even Enron had a CSR report to deliver to their directors (often to great praise and multiple awards) on an annual basis. The problem with traditional CSR is that it is compartmentalized ethicality—Team A exists to make all the money, while Team B signs on to the right compacts and develops the right charitable relationships that allow for the atonement of the sins that ‘A’ may have had to commit in their pursuit of the “real business”.

Even the mechanics of the term “corporate responsibility” clearly define where a venture’s priorities lie. In this two-word term, the ‘corporation’ is placed first. And then, tacked on at the end, is the ‘responsibility’ bit. Conversely, for responsible corporations—the ‘responsible’ is the primary identifier.

Tsaparis uses the terms interchangeably:

“I, too, am a believer in responsible capitalism, not only because it is the right thing to do, but because I know that the adoption of corporate social responsibility practices is the only road back to a sustainable…recovery”

I fear that a small difference in syntax/semantics will, ultimately, result in a significant difference/disconnect in the action we see play out in real-world/real-time business.

When the ‘responsibility’ piece is front-and-centre, it becomes the lens through which all other decisions are made. As Whole Foods CEO & co-author of Conscious Capitalism John Mackey has said, “Eventually, a conscious way of being has to become part of the DNA of the company” [emphasis added]. The DNA of a company. This is the language of deep integration. DNA informs everything about an organism (or organization) and it cannot be compartmentalized into ‘business’ to the left and ‘ethics’ to the right.

When business insiders insist that CSR is becoming the new standard in business (because frankly, it is the obvious profitable path forward), I think we risk under-appreciating the tension in the PPP economic model. Caring is one thing. But institutionalizing such care and operationalizing the impact you want to see in the world is a whole challenge in and of itself.

So the question, then, is how do we measure the ratio of spin to substance?

To put all of my cards on the table, I should state that I work in Toronto at the MaRS Centre For Impact Investing—where our daily mandate is to help mobilize private capital for public good. We harness the fantastic forces of the market economy and help them bend toward catalytic social impact. Within this mandate, I work on B Corp (Benefit Corporation) Certifications. With this third-party assessment, businesses committed to the triple bottom line of people/planet/profit finally have an objective measuring stick—or as B Corp co-founder Jay Cohen Gilbert says, “B Corp Certification helps differentiate good companies from good marketing”.

Rather than being satisfied with an annual update to their board of directors on corporate social responsibility practices, Certified B Corps are committed to the idea of holistic success that takes into account community investment, environmental impact and workplace experience. They are committed to the big idea—and they’re willing to have a third-party measure their effort and publish their results for all the world to see.

Through the certification process, vague generalities like “going green” and “community involvement” are given a standard of measure that can turn specific actions and efforts on the part of a business into a score that allows the public at large to then see quantifiable evidence of good business done well.

Like Paul Tsaparis, I fully believe in the profit potential of responsible corporations that pursue a triple-bottom-line approach. But a good heart or a great marketing department will not be enough to lead us to a different kind of capitalism in the coming century. We’ll also need metrics.

So as “executives, employees, shareholders, pensioners, voters, taxpayers and governments”, let’s demand quantifiable measures like B Corp Certification and then hire, apply, trade, invest, advocate and buy accordingly.

This article was originally published on SocialFinance.ca