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Businesses have only recently begun to offer systematic reporting of their social sustainability practices. This presentation describes and critiques several ways firms and society are responding to an increased focus on social impacts of business.
1. Corporate Social Responsibility (CSR) reports. Over the last 2 decades, companies have used reports to chronicle their activities with respect to various stakeholders, both internal to the firm and external. Some companies have done an admirable job, while other companies have used these reports mainly as PR vehicles. There are no standardized approaches or requirements for these reports.
2. The Global Reporting Initiative’s Sustainability Reporting Guidelines. The G4 framework is becoming a worldwide standard for sustainability reporting; its most recent iteration includes a much more thoroughly-developed framework for considering social impacts than previous versions. Although use of a standardized reporting system is still voluntary in the US, the EU requires that publicly traded companies with over 500 employees address “policies, risks and results” in relation to their company’s social, environmental and human rights impacts, diversity, and anticorruption policies, and that these disclosures must be included as part of the company’s annual financial report. While valuable management tools, these reporting structures are sometimes cumbersome for companies to set up.
3. B Corporation standards. Certified B Corps are for-profits that have undergone rigorous assessment related to social and environmental performance, accountability, and transparency and that have formalized their dedication to being a “force for good” in their governance structure. Currently, Certified B Corps are found in 42 countries around the world and in over 120 different industries. It may be easier to establish a start-up as a B Corp than to 'retrofit' an established company.
4. Certifications. Third-party assessments of their structure, strategies, operations, and implementations are required for independent certifiers to decide whether a company should carry the ‘seal of approval’ of the certifying organization. There are a variety of certifications that focus specifically on socially-relevant business (e.g., Fair Trade Federation, Rainforest Alliance, Utz); making clear to customers and consumers what a certification signifies remains a challenge.
5. Regulations. A number of recent regulations establish standards for worker conditions in supply chains. The Dodd-Frank Bill of 2010 (U.S.) established traceability and reporting requirements for users of ‘conflict minerals,’ with the first required reports published in 2014. The OECD adopted a similar due diligence recommendation in 2011. The California Transparency in Supply Chains Act of 2010 took effect in 2012 and requires qualifying companies to disclose actions they have taken with respect to slavery and trafficking. The 2015 UK Modern Slavery Act requires similar transparency. Many other EU governments are in the process of establishing similar regulations.
Addressing the often-distant and nearly ‘invisible’ social impacts of a company’s operations is in many ways more difficult than tackling visible environmental impacts (belching smokestacks or fouled water effluent). There are some positive ‘case studies’ of global companies that have taken bold steps toward social responsibility with respect to their supply chains and workers as well as their impacts on communities--Unilever, Gap, and Starbucks are examples. The social dimension of sustainable business will come under increasing scrutiny: widespread reporting and discussion, and continuing regulatory attention are expected in the coming months and years. It is important to formalize our consideration of these thorny problems around business and its impact on society.