Why is Corporate Responsibility in the Public Interest?

On Wednesday, the CROA convened its Corporate Excellence for Government Roundtable at the George Washington University to address Corporate Responsibility in the Public Interest.  We had the privilege of a keynote by Martha Johnson, Administrator of the GSA, who charged the roundtable with identifying best practices, setting standards, and developing comprehensive measures that would help GSA achieve its “big hairy audacious goals” of advancing government transparency and achieving a zero environmental footprint for the US government.

In kicking off the discussion, I started by answering the very fundamental question posed by the day’s session:  what is corporate responsibility and why is it in the public interest?

I relayed the story of Paul Dickinson.  A few years ago, Paul was living in the UK and became quite concerned about climate change.  He wasn’t sure what governments would do about or if they would act fast enough so he decided to take matters into his own hands.  He asked himself, how can I have the biggest impact?  Well, probably by working with the biggest users of carbon, namely large companies.  How can I get their attention?  Well, if not through government, then probably through the other constituency they care about most:  their investors.

Paul went around to all the major institutional investors -- the national pension funds in the EU, the state pension funds in the US, mutual funds, etc -- and got them to require their portfolio companies to disclose their carbon use.  From there, the Carbon Disclosure Project was born.  In fact, he was so successful that the US Securities and Exchange Commission (SEC) picked up on the idea and decided to require all US publicly traded companies to disclose their carbon footprint.  Paul has since moved on to a new issue: water.  We’re helping him, bringing together on stage at the CRO Summit in Chicago major water users like Molson Coors, investors like Norges Bank Investments (Norway’s national pension fund), and Paul’s latest endeavor, the Water Disclosure Project.

Now let’s unpack that story.  First, we can see what Corporate Responsibility is not.  Responsibility is not obeying the law or adhering to regulation.  Government can’t mandate responsibility.  Once it’s a mandate, that’s compliance... and you can’t comply your way to greatness.  Once the SEC mandated it, Paul moved on to water.  And so must all true practitioners of Corporate Responsibility move beyond compliance.

The renowned British jurist, Lord Moulton distinguished three realms of human action:  that which lies solely in the realm governed by law, that determined by independent free will, and that vast gray space in the middle: the realm of ethics.  That’s the space we occupied during our discussion on Wednesday.

What does it mean for a company to be a citizen in society, with all the rights and responsibilities of a citizen?  What is the social compact... not the mandate, but the binding agreement between the parties?

I’ve always felt when you want to get a new view on your own country, read about it in a foreign newspaper.  So this past week, that’s what I did.  I went to Paris.  Some people think I went for the cheese and the wine, but I actually went for the opinions.  I went to listen to the members of the CROA’s European Steering Committee, to hear how they think about corporate responsibility.

The French use the term development durable.  Durable development.  As a student of the English language I relish this term: durable.  It evokes a sense of permanence.  That when we think of our actions we should think of how they will endure for the ages.

To me, that’s what corporate responsibility is about.  Beyond compliance, beyond governance, beyond zero carbon footprint, social responsibility, and check book philanthropy.  It’s about all the things that make companies good places to work at, invest in, do business with, and live next to.

Corporate responsibility is in the public interest because democracy depends upon it.  I really can’t overstate that point.  We live in a democratic capitalist society.  A free society and its free markets depend upon data.  Without transparency and accountability democracy and markets will cease to function.  They are the precondition of responsibility and citizenship.

And that’s what we’re here to discuss:  how we as a community come together to encourage not just compliance, but a new social compact between corporations, the government they work for, and the society they serve.  Not because we have to, but because it’s the right thing to do.

For over 11 years, Corporate Responsibility Magazine and the CROA have evaluated the transparency and accountability of public companies, first with the 100 Best Corporate Citizens List, then with the Black List of the World’s Least Transparent Companies, and now with this Roundtable to improve government contractor transparency and responsibility.  Over the past decade we’ve seen that what gets measured gets done.  By publishing these lists and their data, we’ve seen a measurable improvement -- year-over-year scores have improved among the top companies.

We’ve also seen a new awareness, as consumers and corporate buyers increasingly look for responsibility and transparency in the products and services they use.  In fact, in our survey of NYSE Euronext companies, over 60% said at least one of their offerings depended on a responsibility and sustainability message.  Administrator Johnson echoed this, noting, "I think we’re beginning to see that green really does sell.”  

During the day’s panel discussion, which included Fluor’s VP for Corporate Compliance Wendy Hallgren, SEC’s Chief Acquisition Officer Julie Basile, the US Senate Homeland Security & Government Affiars Committee’s Chief Counsel Kevin Landy, and IBM’s Managing Partner for Public Sector Chuck Prow, we teased out some of the issues that would help get to a better state of accountability in managing the government’s supply chain.  The group followed up the panel with a short, but intense working session that spotlighted the need for specific transparency, accountability, and sustainability measures.

I think Administrator Johnson put it best when she said, "With leadership, with strategies, with changed language, with measurements, and with good collaboration, we can move forward.”  The Roundtable began some of this work on Wednesday.  Now we need to pick up that momentum and deliver a comprehensive plan designed to achieve concrete outcomes that will help GSA and the entire government supply chain hit Ms. Johnson’s “big hairy audacious goals” of transparency and zero environmental footprint.  The CROA has committed to providing the Hill, GSA, and other government executives with ongoing briefings on the Roundtable’s progress.

I spent the better part of my career as a government contractor.  I went to work every day believing that I was serving the national interest.  I know that there are few things as important as doing the people’s business and that’s what government executives and contractors do every day.  That work needs to be responsible... sustainable... durable.  Meant for the ages.

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