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Why sector-based initiatives will take sustainability into the future

Patchwork of Fields

Powered by article titled “Why sector-based initiatives will take sustainability into the future” was written by Paul Hohnen, for on Friday 12th April 2013 09.22 UTC

CSR and sustainability departments of emerging market and mature market multinational companies face very similar and familiar challenges. Internally, these include difficulties convincing CEOs and CFOs of the business relevance of CSR. Externally, there is mounting frustration with the ever changing landscape of CSR tools and the usefulness of such tools in responding to real business needs, especially in the current hyper-competitive market context.

While there are of course differences between multinational companies related to national, cultural and sector contexts – wherever their origin, they all need to be increasingly alert to the full spectrum of sustainability ‘mega-trends’ that are reshaping the global business environment. These were among the headline findings of a three-day peer-to-peer learning workshop in Geneva involving senior CSR officers from multinational companies based in countries as diverse as Argentina, France, Mexico, South Korea and Sweden.

The retreat, hosted by the UN Conference on Trade and Development (UNCTAD), was in part inspired by research suggesting that many multinationals in the emerging economies are successfully pioneering new approaches to CSR that were delivering co-benefits such as economic growth, social inclusion and reduced environmental impact. Participants identified what they saw as the main strengths and weaknesses of CSR and considered how it might be taken to the next level.


Companies are frustrated on two fronts. First, the inability of generic CSR standards to move from the broad “issue identification” phase to the “business implementation” level. While the latter is largely the responsibility of each business, there is a sense that more is needed at the sector and value chain levels to develop practical (and even certifiable) industry accepted standards. There is also a concern that standards are becoming too complex and changing too often to be genuinely useful.

Data management

One common challenge is how to optimise the business value of the increasing amounts of information being demanded (eg from stakeholders) or becoming available (eg from new media). Resource capacity and cost constraints are limiting the ability of CSR departments to “slice and dice” data optimally. One solution to this would be to develop comparable value chain data sets on key performance indicators, which could be use to drive performance improvements, including with SME suppliers. Commercially available software tools could be helpful in this context.


While most companies use and derive some value from the GRI framework, the indicators need to be directly material to their business. Too often, indicators (eg on total water use) are limited, and are used merely in a tick box fashion. Many also feel there should be a link to financial performance that is currently missing, and there is hope that the proposed Integrated Reporting approach might help. The imminent release of the G4 GRI framework hasn’t alleviated concerns, with many viewing it as both too complex and too soon. Especially as companies from emerging economies in particular are still struggling to apply the G3 framework.

Business Strategy

Looking at survey findings of CEO attitudes, it appears many CSR experts believe that the conditions are not yet ripe for sustainability issues to be fully integrated into the business model. While low hanging fruit measures (for example, improving energy and material efficiency and stakeholder relations) are being taken to reduce costs, and more sustainable products and services are being launched, the regulatory framework does not provide the necessary incentives to make the major strides needed to further improve social and environmental performance.

Company, supply chain and sector-based initiatives are needed to explore how sustainability issues can drive future business growth and are the next big thing in strategic terms. While a supportive – and above all consistent – regulatory environment is ultimately essential, companies don’t need to wait to explore these emerging markets. Looking at the world through a CSR lens could be an efficient way of interrogating the robustness of current business models.

Looking to the future

CSR practitioners see a continued complex environment and a patchwork of diverse initiatives, as businesses, governments and others seek – with varying degrees of enthusiasm and success – to increase the environmental and social “goods” (and reduce the “bads”) within the boundaries of the current economic model.

There is a distinct sense, however, that the time has come to move beyond generic “what’s expected” CSR tools, to more granular supply chain focused tools. Initiatives such as the Sustainable Apparel Coalition and the Sustainability Accounting Standards Board (SASB) are examples of the emerging CSR 2.0, where businesses and stakeholders from specific sectors identify and define the material information for the particular sector and apply it uniformly along the supply chain. This might go a long way to meeting some the current problems with CSR.

At Rio+20 last year, governments again acknowledged the critical importance of sustainable business. But no one expects the necessary regulation in support of the future we want to be enacted anytime soon, and certainly in any uniform manner. And maybe that is not such a bad thing, for if CSR is to survive and thrive, it will ultimately have to be owned, driven – and judged – by the private sector, together with its stakeholders.

Paul Hohnen is an independent consultant and an associate fellow of Chatham House. He has been a diplomat, director of Greenpeace International and a director of the Global Reporting Initiative.

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