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The Business Of Responsibility

8th January 2010

Corporate Social Responsibility is one of the new buzzwords (buzzphrases?) of our globalising world.

Mary Longhurst, a CSR specialist who divides her time between the UK and India, explains why it matters to all of us.

You could be excused for thinking, by its title, that this piece is about to give you the kind of lecture you got as a child from your parents, in an attempt to help you act as a mature human being. Just the word ‘responsibility’ can make the world seem a less exciting place. It can make us feel burdened and heavy-hearted; it’s not something to be taken lightly. But there’s another way of looking at the concept of responsibility and that’s by seeing it as something that demands initiative – a much more dynamic idea, and one full of energy, excitement and new opportunities. It’s on this level that I’d like to offer some food for thought on the issues of personal and business responsibility, particularly at a time when so much energy in terms of anger is focused on business, and in particular, the financial world.

With globalisation, the business world has become more complex than ever before. The size and power of some of the multi-nationals means that no single government can be aware of all their activities, let alone attempt to control them. It should be of some consolation, then, to know that alongside the public anger aimed at the finance companies sits a business world rife with talk of responsibility, in a way we’ve probably never experienced before. It’s couched in terms such as corporate social responsibility (CSR), sustainability and corporate citizenship, each of which can be interpreted in many different ways (no-one said this would be easy…), and married to a whole range of local and global issues such as recycling, Fair Trade, human rights and global warming. There is very little agreement on the definition of these terms, but the business world clearly wants to show that it’s trying hard to go beyond what is required by law, to do more ‘good’, and be better at it. And this is no doubt due to the increasing pressure from the media and pressure groups, to get business to act more responsibly and take more seriously the views of a wider public than just its shareholders.

For most companies, acting responsibly while doing business in a complex, global environment isn’t always straightforward, and the issues they face are rarely clear-cut. Making improvements may involve their taking a closer look at areas such as where and how the business sources its products and raw materials, how it can reduce carbon emissions, or more simply, by being involved in their local communities. It means they have to understand clearly the impact the business makes, sometimes making tough choices, and working more closely with the people whose lives they affect.

This means getting closer to their stakeholders, the different groups of people affected by a company’s actions. Companies have a lot of experience in dealing with shareholders, investors and consumers; here the channels of communication are reasonably clear and the style familiar. When businesses operate globally and source products from around the world, though, they move into very unfamiliar territory. And this is where the idea of responsibility demands energy and initiative.

Take Primark for example. In June 2009, when the BBC’s Panorama programme exposed their use of child labour in India, the company took immediate action and stopped using these factories. Simple. But in the process they deprived a whole community from much needed income. After all, families decide to send their young children to work rather than to school because they believe that they don’t have a choice, and they desperately need the money for food. A better alternative – albeit more complicated and time-consuming for the company – would have been to invest in and work with that community so they could continue to provide work: jobs for the adults and education for the children. This way the community would have been given a future, and the company would have been able to monitor who was actually producing its products. Now that the media interest has died, though, the pressure on the company is off, so it has been back to business as usual – except for those communities that have been left with no income. When companies such as Primark make changes to the way they do business, these should be beneficial for all concerned, not just for the shareholder and the consumer. This approach demands new ways of thinking, and a great deal of initiative, but the results can literally save lives and communities.

This is a sentiment that many people would support but there is another side to the story. Primark appears to have weathered the recession better than most, clearly because their goods are offered at extremely low prices. But low prices for the consumer implies, of course, a very low income for the operatives – who are likely to be the most desperate workers in the factories of the developing world. Many of us delight in a bargain, in feeling that we are getting something for nothing… but how many times do we stop to ask ourselves how such low prices are possible? Someone is paying for them, and invariably it is those that can least afford it.

So responsibility is not only for business but for us as consumers too. The interesting point is that businesses tend to act more responsibly when there is pressure from the public to do so (even if, cynically, action is taken only because the consequences on the business of not doing so are detrimental to its profit potential). The impact of our changing retailer or buying a new brand sends a clear message to a company that it too needs to rethink its buying behaviour. For many companies, consumer spending is the main source of income; as consumers we need to understand that taking the initiative and changing our habits really can change business practice – and the world.

Mary’s fee for this article has been donated to Action Aid India.
See www.actionaid.org.uk for more details.

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