INTERVIEW WITH David Grayson FOR THE FIRST EDITION OF THE NEW CORPORATE MAGAZINE FOR THE CVRD COMPANY, BRAZIL
1) According to your book 'Social Commitment and Company Management' (free translation from Portuguese) launched in Brazil last year, corporate social responsibility (CSR) is a survival question. Why?
Because around the world now, there are higher expectations of business behaviour.
Businesses which behave irresponsibly may find it harder to attract and retain talented staff; will
be a less attractive business partner; may be seen by communities where they want to locate as
a "dangerous intruder"- and all of this will threaten the value of an investment in the business.
As the American investment guru Warren Buffett says: It takes 20 years to build a reputation
and five minutes to ruin it. Ask Enron. Ask Arthur Anderson. Ask WorldCom.
2) What are the main changes that ocurred in the world during these times of globalization?
I see several great global forces for change creating pressures and a different operating environment for business. A Revolution in Technology & Communications permits: automation, customisation, sub-contracting, global supply chains, home-working, manufacturing and extraction in remote areas; and the ability to operate back-offices across the world. Yet at the same time, Information and Communications technologies means instant access to information and no hiding places. Thanks to the Internet and other new media, vigilante consumers, concerned citizens and activist ngos can mobilise powerful campaigns against corporate behaviour of which they disapprove. Then there has been
a Revolution in Markets. Since the collapse of Communism, three billion consumers have joined the global market economy and we have seen a relentless process of liberalisation, privatisation and globalisation. Amongst the consequences for business:
• Privatised organisations have to create a new culture and employee loyalty
• More firms going international & having to operate in culturally diverse markets
• Dramatic growth in value of brands makes them more vulnerable
• Business as larger part of society/economy in liberalised & privatised economies - makes business more in public eye
• More likely will want to raise funds on international financial markets where funders will assess risks to value of investment/loan from environmental / social risks
And last but not least, we are in the midst of a Revolution in Values which means significant increases in wealth, choice and education - and for the first time in history, that large numbers of people across the globe are free to express their own values and often do so in unstructured, unpredictable and spontaneous ways. People are more willing - and thanks to the Internet - more able to question and check information that they are being told. There is a decline of deference.
• Old command & control management structures redundant
• More questioning of authority
• Trust has to be earned
• More vocal & articulate stakeholders pressure business to be more transparent & accountable, & "sell" versus "tell" what want to do.
3) What is the impact of these changes in the companies around the world?
There are of course many consequences for business as a result of these global forces for change. I am concerned with one here - risk for corporate reputation, profitability and costs.
The reality is that issues that were once regarded as soft by managers such as community, environment,
human rights, diversity, work-life balance; are now hard - hard to manage, hard to ignore -
and very hard if you get them wrong.
The result is that business responsibility has now to be treated as an integral part of running a business -
if you want a sustainably successful business. Being a responsible business means minimising negative
environmental and social impacts - and maximising the positive impacts.
4) In which context the theme of corporate social responsibility(CSR) is considered in Brazil, Latin America and worldwide?
Some aspects of Responsible Business are pretty universal such as the need for businesses to reduce their negative environmental impacts. Some issues will be more important for businesses in certain countries - or in certain industry sectors. You have, for example, the Extractive Industries Transparency Initiative.
In Southern Africa, issues like preventative education campaigns against the spread of HIV/AIDS, the provision of retroviral drugs for people living with AIDS, and non-discrimination, are important business issues.
5) Which are the perspectives for corporate social accountability (CSR) in Brazil and around the world?
I am by nature an optimist! The glass for me is half-full rather than half-empty. I see many positive signs of business people around the world responding positively to the challenges - and the opportunities - of responsible business. Here in Brazil, I have been very excited by the commitment of influential organizations like Dom Cabral to make responsible business an integral part of how they think about business and management.
6) How may a company become socially accountable (socially responsible) and which are its major challenges?
Even some of the global leaders in Corporate Responsibility speak of being on a journey towards becoming responsible rather than claim to already have fully achieved that goal. Some of the practical steps include:
- Explicit articulation of Vision and Values of the organisation consistent with responsible business practice
- which are then intensely and continuously communicated throughout the organisation and beyond
- Vision and Values have to be incorporated into Induction and management / staff training
- There meeds to be effective tools and processes for scoping and then prioritising risks and opportunities associated with responsible business practices
- and a decision-making process at top of organisation (board / board sub-committee etc) for oversight and effective decision-making through organisation
- Responsible Business and living the Values have to be key part of performance objectives / appraisal / reward and recognition structures and key for promotion. You also need effective stakeholder engagement processes
- Responsible Business issues have to be a fundamental part of procurement criteria and there needs to be appropriate measurement and reporting of company's performance.
The major challenges are to ensure that all parts of the business understand the significance of these issues for the business and that all employees understand how these principles of responsible business impact on the way that they carry out their jobs.
7) Which type of risks may be minimized by a company when it adopts a socially accountable (socially responsible) posture?
I hinted at some of these in question 1. Risks that talented staff won't want to work for an irresponsible business. Risks that local communities will fight against an irresponsible business opening or expanding in their area. Risks that reputable business partners will not want "guilt by association" from a connection with an irresponsible business. Risks that the international media and ngos will organize campaigns against irresponsible business behaviour. All of which creates risks to the value of investments / loans to such a company.
8) What are the benefits that corporate social accountability may bring to a company and to the society as a whole?
You become a business that people value: your employees value it as a great place to work; your customers and suppliers value it as a great business to do business with; the community values it as a great neighbour (and like good neighbours anywhere, they look out for you as you look out for them); and as a result,, investors and financiers value it as a business which it is worth putting their money into. Increasingly, being a truly responsible business will create new opportunities - for example - to access new markets, to develop new products and services; and to develop new business models. That is the subject of the next book which I am working on right now! I also believe that getting many more sustainably successful businesses is the best long-term route to optimising the contribution that business can make to sustainable development and some of the worlds seemingly intractable social, economic and environmental challenges of poverty, inequality and disease.
9) How do you see the steps being taken by CVRD to create internal core competencies in corporate social accountability? Which is the most important area at this moment?
I am very impressed that CVRD is creating a corporate university and, thereby, acknowledging the vital importance of becoming a learning organisation It was a privilege to be able to speak to so many of your managers on the workshops for entrepreneurial leaders. I think the most important area at the moment is giving the leaders of CVRD the tools to apply responsible business practice throughout the company and wherever you are doing business.
Readers can find more information at a number of Brazilian and international websites dedicated to business responsibility:
• Business in the Community:
www.bitc.org.uk• Business for Social Responsibility:
www.bsr.org• Conselho Empresarial Brasileiro para o Desenvolvimento Sustentavel - CEBDS:
www.cebds.com• Instituto Ethos:
www.ethos.org.br• International Business Leaders Forum:
www.iblf.orgDavid Grayson's own website is at:
www.davidgrayson.net© David Grayson December 2003