Corporate Social Responsibility efforts of a company are on a purely voluntary basis. However, as demand is increasing more and more firms try to set up a CSR department in order to stay competitive.
Are there any formal regulations that firms can follow?
There is the attempt of ISO 26000:2010 to provide guidelines for developing and implementing a CSR strategy.
However, Jo Bilson, management consultant, criticises in her blog post the lack of any formal regulations concerning CSR efforts. This is also emphasized on this website. Here it is pointed out that ISO 26000:2010 is “not a management system standard”. It can not be understood as a certification since there are no approved norms concerning CSR. Thus, it is merely an attempt to assist firms that are concerned about their corporate sustainability.
Atos, an international IT service company, makes use of a different approach:
GRI-Global Reporting Initiative
GRI is a non-profit organization that developed a Sustainability Reporting Framework that is also used by Atos. In their CSR report 2011, Thierry Brenton, Chairman and CEO, proudly pronounces Atos success in the GRI rating program. Atos was awarded an A+, which is the highest possible ranking. Becaus of this ranking, Atos declares themselves to be a “sustainablity leader”. This is what Elaine Cohen, CSR consultant, criticizes in her blog “The A+ Myth of Sustainablity Reporting: Stop the Hype”. She wonders whether the achievement of an A+ level is conterminous with “sustainability leadership”? According to Elaine Cohen, the so called “GRI reporting standards” are rather setting standards on how to improve a firm’s reporting level rather than focusing on the report substance.
Right after the foreword of the CEO, the CSR report provides some key performance indicators in terms of money.
Jo Bilson supports Atos’ mention of financial achievements in a different post “Budgeting for Corporate Social Responsibility”. Here she assures that investors and other stakeholder increasingly demand transparent and accurate financial statements of companies. The financial budgeting plays a major role in this context. Bilson emphasizes the necessity of a well-structured CSR budgeting process. One advantage Bilson sees when improving a firm’s CSR budgeting process is the ability to free up cash by optimized accuracy of cash flow reporting that then can be used for CSR strategies.
In their CSR report 2011 Atos claims to report according to globally accepted reporting standards, here GRI.
Jo Bilson objects to the assertion of Atos to align to a general reporting standard.
In her blog post Jo Bilson points out the main criticisms of CSR:
- lack of regulation
- misuse as a marketing ploy
- abuse of power by decision-making companies in the social domain
Moreover, Bilson warns that due to the lack of formal regulations, managers responsible for CSR might see their opportunity to increase their power position within the company.
Generally spoken, she criticizes the actual trend of adopting Corporate Citizenship within businesses. She underlines her argumentation by referring to Milton Friedman’s famous article in The New York Times Magazine. According to Friedman the only “social responsibility of business is to increase its profits”. Friedman calls businessmen, attempting to convince the world that they have real social consciousness, “unwitting puppets of the intellectual forces”.
“there is one and only one social responsibility of business-to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”