It's the Economics, Stupid

Just as people sailing full-tilt into an iceberg zone can get distracted rearranging deck chairs, those of us advocating corporate responsibility may be guilty of spending too much time fiddling with the nuances of the language that describes our work. We do this even as abrupt climate change, pandemics, and other mega-trends float, quiet but menacing, in our path. But as people like the Inuit have long known and acknowledged via their kayak-loads of words for ice and snow, language can powerfully shape thinking -- and perhaps even influence our species' chances of survival.

Next year marks the 20th anniversary of the landmark U.N. Brundtland Commission report. It will be a moment when world leaders will have to account for two decades of progress made, or not made, on sustainable development. So perhaps it's indeed time to ask ourselves whether the language of corporate social responsibility (CSR) has blinded us to looming planetary and civilizational risks.

The very fact that terms related to CSR are now in wide use means we have made considerable progress in catching the attention of businesspeople. But the way those terms frame the issues can leave companies fretting about things that distract them from the real challenges -- a bit like an igloo-dweller straining to keep his seal-fat lamp from smoking when the ice is disappearing beneath him.

Not that a few global leaders aren't trying to help us focus; think of Al Gore's new film, or U.K. Conservative party leader David Cameron energetically dog-sledding toward melting glaciers. Still, it strikes us that it's time to give our vocabulary a vigorous round in the cocktail shaker.

Does the intensifying focus on corporate social responsibility risk pulling our eyes from core economic challenges? This concern is behind the current efforts of our colleague Geoff Lye, SustainAbility's vice chair, to stress the growing need to think in terms of corporate economic responsibility instead.

Full Speed Ahead

Since we coined the term "triple bottom line" in 1994 to characterize society's growing demand that businesses balance the economic, environmental, and social bottom lines, we have seen an accelerating progression from early concerns about safety, health, and environment to a growing range of social concerns, among them poverty, human rights, and diversity. Recently, it has dawned on us that the economic bottom line -- where we expected private-sector savvy to make progress easier -- is in fact least understood by many of those shaping the corporate and public-policy agendas.

Economic issues have long been the poor cousins within the corporate-responsibility debate. For many years, they were considered to be synonymous with financial issues, and widely assumed to be well managed. But as concerns like fair trade, fair pricing, and fair wages have increasingly made headlines, it has become clear that economic issues are surprisingly ill-understood by most corporations, and an underrepresented dimension of the corporate-responsibility agenda.

As you chip away at this, it's clear that too many of us have been obsessed with the nearest iceberg, rather than thinking about the wider ice pack -- let alone the underlying, shifting continental plates of economic reality. How, for example, does the bribery and corruption agenda connect with human rights or biodiversity? Economic responsibility is not simply a matter of companies being financially accountable, recording employment figures and debts in their latest corporate-responsibility report. The economic dimensions of the sustainability agenda should embrace accountability, affordability, diversity, and equity. That is what makes up "corporate economic responsibility."

Let's just toy with one of these dimensions: economic equity. This addresses the reasonably transparent -- and certainly strategic -- management of the creation and distribution of wealth. It includes issues like fair trade; fair wages (is it reasonable for 50 cents of the price of a $100 sneaker to go to production workers, and $18 to the retail labor selling them?); fair pricing (is it reasonable for the world's poorest to pay from two to 20 times as much as the richest for their food, water, energy, and drugs?); and -- the new humdinger -- fair tax (is it responsible for business to see corporate taxes purely as a cost to be avoided, rather than part of their "social contract" with society?).

SustainAbility's latest report, "Taxing Issues," explores how different stakeholder groups view the latter issue. It proposes ways in which companies can assure themselves and their stakeholders that they have a responsible tax policy in place. Tax avoidance is perfectly legal, but often ethically suspect -- for example, one study has shown that tax avoidance by business deprives developing countries of more than $50 billion a year. Under increasing public scrutiny, companies will need to think about tax policies in new ways -- and weigh their social and economic impacts more carefully.

We believe these emerging economic angles can potentially take the corporate-responsibility agenda to a new level. The advances we've seen in corporate responsibility so far are to be welcomed and, in cases of clear best practice, applauded. But in its current incarnation, the movement is simply not equal to global challenges like poverty and climate change.

With the shift in power from the public to the private sector -- and with open and globalized markets to pursue -- come obligations and responsibilities. Economic diversity, accountability, and equity cannot be delegated to public-affairs staffers and corporate-responsibility teams. These issues go to the heart of a company's business model, challenging the conventional wisdoms of development and investment. Ultimately, they go to the heart of a society's economic model.

Those at the helms of "supertanker corporations" must open their eyes to the billions of people living in poverty who are currently denied affordable access to clean water, health care, and energy.

Navigators like Muhammad Yunus of the Grameen Bank and C. K. Pralahad, with his book The Fortune at the Bottom of the Pyramid, are busily mapping the trade routes. And those doing the steering ought to see the invisible billions below the waterline not simply as a new market opportunity -- though it certainly will be -- but as a critical global community, whose needs must be met if 21st-century capitalism is to have any chance of being sustainable.