Debunking 11 controversial corporate responsibility myths

There are a number of what I believe to be myths bandied about as truisms in the area of corporate ethics. Here's a few of them, and why they are more myth than reality: 

1) You have a responsibility to create jobs

This myth is widespread around the world as richer markets - and their politics - have felt the recent economic squeeze.

Pressure to feel this mythical job creation responsibility can grow very quickly, particularly in emerging markets if you are a foreign company. 

Politicians in the US and UK, amongst others, prefer to talk about “job creators” rather than “useful products and services”, hence the feeling.

But it is not true. You don't have a responsibility to create jobs, no matter what CEOs may feel the need to say when they are under pressure, or comment on policy options or incentives.

You have a responsibility to create useful and sustainable products and services  that people need, in an ethical way, full stop. 

Don't feel bad about that. Why should you?

2) You have a responsibility to pay corporation tax without complaint or comment 

Not true. High corporation tax is a tax on the very jobs politicians are so keen on business creating. It's a ludicrous state of affairs. 

So much money is held offshore that could be put to great use funding research, innovation and risk taking, because of daft tax rules.

Industry associations are generally left to speak out about this. But CEOs have much more traction in the media. 

If corporation tax was 10 or 15 percent, companies would pay much more of it, and spend less on accountants and lawyers to help them avoid the onerous rates of 20+% that most countries impose so short-sightedly.

It's hard to understand how important this point is, particularly for small business, unless you've seen it first hand. 

It's so damn hard to make a decent profit as a small company (I've run a few) that the sight of 25% percent of that going to government, once you've paid every other tax, is hard to take. 

This is particularly true when you would have invested that money better yourself in creating new products and services that lead to the job creation government loves so much.

So rather than move country, or fiddle with structures and internal shuffling, why shouldn't business speak out more fluently, catalyse debates, (perhaps via associations) and at least start a genuine conversation about what lower corporation tax could do for improving both business and social outcomes.

3) You have a duty to your shareholders to maximise value to them first

This myth is the strangest, and yet the most widespread of the lot. It has never been true. If you don't believe me, take a look at the evidence here (3 min video) and in longer form here. This is an important point, so take a look. 

4) You need to "give back"

What did you take, and why? What has giving back got to do with doing honest business? I still see people talking about this, from celebrities to CEOs. 

Unless you were a robber baron or gang chief, drug lord or general criminal, you shouldn't have to see doing useful and important things as “giving back”. It is condescending, accidentally arrogant and reinforces a separation of how you make money and how you behave.

5) Companies should leave policy to politicians and policy wonks

Companies sometimes like to see themselves as islands of excellence in a messy world. No matter how true this can be in some cases (and it can be, in a localised way) if you see a bad system that is holding back progress, you have a duty to try and change it. 

That's particularly true in the collaborative world of corporate responsibility and sustainability. Governments are poorly stocked with talent, we all know this to be largely true. 

Many modern politicians (the UK is a good example) are no more than PR people who have never really worked. They need our help to make smarter decisions. 

There are lots of ways to do this. The point here is that you can't afford, morally and business-wise, to just sit on the sidelines and watch.   

Here's a recent post where I went into a bit more detail on this area.

6) Certification is the answer

Whilst certificates of "goodness" suit our desire for simplicity, certification has not been proven to scale. 

What we need are better/smarter large scale systems (sustainable agriculture is a good example) rather than just islands of excellence which can't get into double digit market penetration. 

It is not a zero sum game, as some like to present it. Certification in corporate responsibility and sustainability surely has a role to play, but systems change has a much bigger one. Think about agriculture and small holder farmers as an example. And no, guidance standards such as ISO 26,000 are not going to save the world, useful tools as they are. 

Training, technology, buying practices and incentives change will do more for struggling small farmers than putting them in co-operatives and giving their products certificates.

If certification is the answer, it's a very limited question that's being asked. 

7) Consumers just need to be empowered in order to drive business change 

If only. Lord Leverhulme apparently once said something like “I know half my advertising works, I just don't know which half”. 

Many thought technology and the internet would solve that measurement problem, but it has not, and probably will not. 

Measuring what drives buying habits and motivations is still very nascent, at best.

Human decision making is so complex and has so many variables that much as we would wish it otherwise, simply 'empowering' consumers to make better informed ethical choices or demands is very very hard to do at scale. 

Personally I am sceptical it can be done at all. Better to change the systems (or create new ones) than try to change people and culturally-informed habits. 

There's more on this here. There's an interesting RSA animate video here too.

8) You've embedded CR into your corporate DNA

No you haven't. Almost no-one has beyond a handful of hero companies whose experience, whilst inspiring, is impossible to replicate. 

That doesn't mean we should be depressed at all. No doubt your company has made great strides in the last decade. 

But the area is still quite new, and cultural change takes time, new and reformed systems and incentives and consistent values-led leadership. 

Rather than say you've embedded CR, which many CEOs do, talk about how your values are in line with the challenges of the 21st Century (and make sure they are). Cart before horse doesn't work.

9) Your vision, mission, and values  are clearly laid out and communicated 

It's unlikely this is true. Perhaps you are one of the few companies that has done this well but there are not many of these. For some reason, possibly due to multiple inputs, getting this right is really hard. Even when companies get one part right, they often fail at enunciating the others clearly. Here's some further reading in a short presentation.

10) You have 'sorted' your sustainability or CSR strategy

Doubtful. You may think you have, because you have some 2015 or 2020 targets. You may even have a holistic plan that covers vision, mission, values, targets and objectives, all of which feed into a corporate strategy. 

But that doesn't mean it's 'sorted'. It just means it's good enough for now, but must be revisited every few years to see which targets need adapting, changing (some removing) and which new ones should come in as issues emerge and your business changes. 

Don't let your bosses become complacent about strategy. I'd also argue that you can't have a “CSR/Sustainability strategy”. 

You have a business strategy, within which sustainability and ethical decision making is a major part. 

You can't credibly have both in parallel, yet I know many companies that try to.

11)License to Operate is just for high impact companies

This might have been true ten years ago, but it is no longer.

Walmart's recently departed head of PR, Lesley Dach, calls it “freedom to operate” instead.

The idea being, presumably, to take out the compliance, heavy-hand-of-the-state element conjured up by the world license. 

Whichever we call it, license to operate is really about sentiment. How do important and influential stakeholders feel about your performance? 

It is now the dominant paradigm in many mining companies, as it should be. But it's a valuable way to look at the world for other companies too. 

Look at Starbucks in the UK and their tax controversy. Nestle (in the past) are another example. Licence to operate is an important part of your risk management. 

Despite what we'd like to think, corporate responsibility and sustainability is today 70-80% about risk management, and 20-30% about opportunity creation. 

We all know that needs to shift in the coming years, and it is, slowly. But let's not kid ourselves, risk must be managed, not thrown into in some 'shared value' PR pot and glossed over. 

Manage risk as best you can whilst seeking opportunity. Licence to operate is a really solid way to look at risk management, whatever industry you work in. 

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