Corporate social responsibility is entering its third decade as a mainstream business movement, at least as measured by the history of BSR, the organization formed in 1992 as Business for Social Responsibility, which is celebrating its 20th anniversary. It's a good time to take stock — of the organization, the movement, and the trends shaping its future.
I've had the opportunity to follow and engage with BSR from its inception, beginning in 1992, when I was asked to collaborate with the fledgling organization to write one of the earliest framing books on CSR: Beyond the Bottom Line, published in 1994. I attended BSR's first conference, in the fall of 1993, which boasted a keynote from the then newly inaugurated president Bill Clinton. I've watched as the organization grew from a handful of professionals to a global think tank and consultancy, with more than 100 staffers and offices in China, Brazil, Europe, and the United States.
The official theme of BSR's 20th annual conference (October 23-26 in New York) is "Fast Forward," but I was more intrigued by the theme of a series of conversations BSR hosted around the world over the past year: "Everything's changed. Nothing's changed." That struck me as one of the more candid and sober assessments I'd seen of CSR and sustainability, let alone by a group whose mission, more or less, is to be a cheerleader for these things.
I took the occasion of BSR's 20th to interview Aron Cramer, the group's president and CEO, a good friend with whom I've had an invigorating, ongoing conversation about sustainability for most of the 17 years he's been at BSR, including eight years at its helm. Following is our conversation, edited for clarity and length.
Joel Makower: Your 20th anniversary theme — “Everything’s Changed. Nothing’s Changed” — is a really interesting assessment of CSR. Tell me how you came to that theme.
Aron Cramer: As the anniversary for BSR was approaching, we talked about what’s changed. Where are we? Not we, BSR, but the wider field that focuses on sustainability. There is progress on some of the Millennium Development Goals. Many companies are working really hard to reduce their natural resource inputs and waste. There’s a lot more information available to consumers, whether they use it or not. Sustainability is part of the discussion. That’s a huge victory.
At the same time, there are a lot of objective measures that demonstrate not only that we’re not making progress, but we may be going in the wrong direction. Greenhouse gases, as they continue to accumulate, is the best example of that, but there are also more and more water-stressed regions, and biodiversity is decreasing. So, we look at the world, and we say the sustainability movement has been around for a couple decades, it’s done a great job of changing not only the business agenda, but the world’s agenda. But there’s still a really long way to go.
The key is to push fast-forward. We feel we — and again, not only BSR, but the wider world that thinks about this — are aware of where we need to go, what we need to accomplish. The question now is: How do we do that, and how can we do that more quickly? And make not just relative gains, but absolute gains in terms of achieving BSR’s mission, which has been the same throughout its history: to achieve a just and sustainable world by working with business. We know where to go. We’ve just got to get there more quickly.
Makower: I started off asking about “CSR” and you ended up talking about “sustainability.” How do you view the difference?
Cramer: BSR’s vision has always been about, and continues to be about a comprehensive vision of good outcomes for society, strong enterprises, and healthy economics that take care of the natural environment. It’s a comprehensive vision, a holistic vision. We started out talking about corporate social responsibility, which was a term that was very useful in terms of getting conversations started. Today, there are some people who don’t like the term. There is no single term that really encompasses the view that we have, but I think sustainability is probably closest.
In some ways, it’s really "sustainable development" because this is not just about preserving the natural environment. This is about ensuring that people have decent livelihoods, and can live in dignity, and be treated fairly. So, there’s a development aspect of it as well. Every term that gets used means different things to different people, and there isn’t a single term that’s perfect. We tend to use sustainability more and more these days, but we’re not dogmatic about it, and advise companies to pick a term that’s meaningful for them that embraces a comprehensive vision, and that they use consistently
Is CSR about constraints or opportunities?
Makower: One of the things I’ve observed is that CSR tends to be viewed as a little bit soft, focusing around community and philanthropy and employees, whereas sustainability is more tangible. Is there a sense that CSR is seen by others as not as relevant to business, particularly in tough economic times?
Cramer: Well, relevance is in the eye of the beholder. For me, the difference between the two and the reason why CSR is not used as widely is this: People hear CSR and they think about the things they’re not supposed to do, whereas people hear sustainability and they think about what they can build. Businesses respond better to thinking about how they can innovate, how they can build things. I think people hear the term responsibility, and they think about constraints. People hear the term sustainability, and it leaves open space to create, which is the kind of thinking that inspires business people. And that is part of the reason why corporate responsibility has fallen out of favor a bit, and sustainability is used more widely.
Makower: What has the global economic situation done to BSR's mission? Has it slowed it down? Has it given it more urgency?
Cramer: The most important thing is what the weak economy in many parts of the world hasn’t done: It has not taken sustainability off the business agenda. So, that’s positive. What it has done is changed it, maybe counter-intuitively in a positive way, because in more difficult economic times there’s more rigor in thought.
During the last four years since the financial crisis hit, companies have focused a lot more attention on what’s material, what’s relevant to them, thinking about eliminating waste, and about collaborations so that more progress can be made without a single company having to take on a complex, systemic question. So, in some ways, the financial crisis has been a positive in that it’s inserted a bit more rigor into the world of sustainability. At the same time, many companies, of course, are struggling with budgets and being asked to do more with less, and that’s affected sustainability as well.
Makower: One of the things we see at GreenBiz is that the sustainability function has dispersed within companies. There’s still a head of sustainability, but that much of the work is being done in the business units, divisions, departments and facilities. That’s both good and bad. Good in that sustainability has become a part of the fabric, bad in that it’s hard to address people when they’re spread all over the organization. Do you see that more as a challenge or an opportunity?
Cramer: It’s actually both. I’ve never shared the view that a chief sustainability officer’s job is to work himself or herself out of a job. I do think it is that person’s job to ensure that CSR is thoroughly integrated into everything a company does — product development, sourcing, marketing, you name it. The best sustainability officers will anticipate changes in the wider world that a company needs to be thinking about. If you integrate everything into business functions, there may be a bit of an early radar that’s lost. There may be less of an ability to engage with non-traditional voices. Those are distinctive kinds of value that a sustainability function can bring.
So, the future ought to include as complete an integration as possible. That’s absolutely necessary, but it’s not sufficient. Companies are always going to need to understand how this big messy thing we think of as sustainability — which is really about every single impact that a company has on the world outside its walls — how that world is changing.
The emerging role of the CFO
Makower: Speaking of early radar, what’s changing in the conversation around CSR and sustainability? Where do you see this headed? Are there any new directions?
Cramer: I think 2012 will be remembered as the year when different kinds of economic valuation came into the mainstream of discussion — with the Natural Capital Declaration at Rio+20, with increasing momentum behind integrated reporting, with Puma publishing a very interesting environmental profit-and-loss statement. We’re starting to see a degree of convergence between ESG [environmental, social and governance] factors and financial valuations.
My view for a long time has been that if you have that happening, and if you have different kinds of consumer behavior, then everything is possible. Without those things, I think there are real limits on what can be achieved. So, right now in 2012, that’s the most interesting news — that there is starting to be momentum behind different ways of calculating value, the integration of so-called externalities, and I think this is a hugely important step.
Makower: So, is CSR and sustainability starting to get into the world that the CFO cares about — materiality and risk, transparency and disclosure?
Cramer: It’s starting, but it’s really early days. If you’ve got 75 or so companies signing up to pilot integrated reporting — it may not be the CFO’s agenda, but that’s something that no big company will do without the support of the CFO. So, if you have six or seven dozen companies doing that, I think it’s a sign that this crucial form of change is, at a minimum, being explored. That’s hugely positive.
But, we hear stories all the time that, on the earnings calls, questions about corporate responsibility — about sustainability — remain few and far between. So, it’s easy to overstate this, but it’s a very important early step.
Makower: You briefly mentioned consumers. As you know, I’ve long been fascinated by that part of the equation in terms of how much, if at all, consumers are moving companies along, and about whether the idea of sustainable consumption can ever gain traction. What do you see happening in the next few years?
Cramer: I think the most important change when we think about consumers is that we have to change who we think of as consumers. If the economy over the last 50 years had as its archetype a suburban family living outside a big American industrial city, that’s no longer the case. The archetype now is someone living in a megacity, maybe middle class or aspiring to middle class, or rural dwellers moving in a mass migration to cities.
We have billions of people whose living standards are increasing, slowly but surely, and they’re consuming more. And the impact of that, cumulatively, is probably greater than the effect of behavior changes by consumers in the West. There’s a reservoir of human need that is untapped right now, and that is going to place pressure on natural resources over the coming decades unless we do things differently.
The other side of the equation are western consumers. At least in urban areas, you’re starting to see more awareness of waste. You’re starting to see small examples of a sharing economy, rather than an economy that is based solely on ownership. But it’s still at the margins.
So, consumers, collectively, no matter which group we’re talking about, are increasing the pressure in terms of whether we can achieve sustainability. If that trajectory continues, then all of the best practices, all of the innovations, may not add up to enough to lead to a sustainable economy.
Next Page: From CSO to CEO?
Makower: As you reflect on BSR’s 20-year path, do you see parallels between its history and the history of corporate sustainability?
Cramer: Absolutely. BSR started as an organization that provided a lot of very basic information, and now we provide a lot of specialized information. We started as an organization that had mostly smaller member companies, and as many people know, we’re now an organization where the majority of our members are large companies. We started as an organization working primarily in the United States, and we now have eight offices in North and South America, Asia, and Europe. Our team was based on a vision, and now we're based as much on the ability to deliver on the vision. I know that we have matured as an organization. I also know that the world of sustainability has matured considerably over the last 20 years, and that’s going to continue.
Our view, going into our third decade, is that integration remains very important, but collaboration to build systemic solutions is going to be even more important. In some ways, that takes BSR back to the future. We’re going to look for ways to catalyze and support those collaborations, which was something that took up a great deal of our time when we got started. We think that looking ahead over the next ten years, that kind of work is going to be even more important as we continue to evolve beyond what a single company can do, and what networks can do, to what ecosystems can accomplish.
Makower: Can you give me an example?
Cramer: We are looking at water, energy, and food, and looking at land use through that prism. That is an issue that, sure, a single company can look at, but is going to require a lot of collaboration, not only in terms of companies and their value chains but also industry partners and partners from different industries, as well as governments, investors, community organizations and NGOs. So, looking at an issue as complex as that, which is of fundamental importance to our ability to achieve sustainable development, is something that has to involve big collaborations. They’re hard to put together, they take a lot of time, but when they come together, they deliver a payoff that is very hard to achieve through other means.
Makower: So, when BSR holds its conference in 2017 — its 25th conference — what do you hope the conference will be about?
Cramer: I’d love to see, first of all, CEOs speaking who have been promoted from the job of chief sustainability officer to CEO. I’d like to see CFOs and analysts talking about the trends they see in sustainability, and I would like to see big collaborations addressing the most complex sustainability challenges, whether it’s commodities, or the pressure on land, or the need to preserve biodiversity — big, powerful collaborations that actually create systemic change, as opposed to really nice case studies and best practices.