The business corporation is undoubtedly the most dominant economic construct of the past century. The nation state is diminishing in its power, cities are indeed growing in numbers but still seeking their social reference (some call is today ‘smart city’, some prefer the terminology of ‘resilient cities’ and there are more…) while corporations are multiplying and growing to be the most important economic organizing mechanism. Corporations are by law a profit maximization entities, doing their utmost to externalize costs and internalize profits. By doing so, some of their executives seem to forget that their business organizations are part of society and their primary duty is to uphold social values and norms.
Alongside the rise of the business corporation and its normative obligations, we see the growth in the public awareness to the issue of aging population. The complex interrelationships between these two major societal issues is a fascinating research field and the focus of my Ph.D. dissertation. The former is the business sector’s relation to its environmental, social, and governance challenges, responsibilities, and expectations, while the latter is a developing social and demographic situation with major ramifications on communities and economies.
Corporate social responsibility (hereinafter “CSR”) is the term commonly used to describe the overall social, environmental, and governance efforts undertaken by business entities. It entails various activities such as the engagement of stakeholders, public relations, political lobbying, risk mitigation, community involvement, financial contributions, and so on. The European Union (EU) states that CSR is “[t]he responsibility of enterprises for their impacts on society,” and notes that in order to fully meet their social responsibility, enterprises “should have in place a process to integrate social, environmental, ethical human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders.”[i]
One of the features of CSR is the requirement for transparency of non-financial information (usually termed “environmental, social, and corporate governance” [ESG] disclosure). Disclosure of these aspects of businesses has been neglected in traditional financial reporting methods but is needed in order to make businesses accountable for their social and environmental impacts. In recent years, there has been a constant increase in the number of companies (and other public agencies) committing themselves to non-financial disclosure.
A recent publication by G&A (Governance & Accountability Institute, Inc.) noted that in 2016, 82% of the corporations listed in the S&P 500 published a corporate sustainability report (G&A, 2016). This is a sharp increase compared to the 20% of S&P 500 companies that published such a report in 2011. Another set of data that displays the proliferation of non-financial reporting is taken from the GRI Database. According to a year by year search conducted by the author, there has been a consistent increase in the number of sustainability reports published, with a total of more than 10,000 reporting organizations and 27,200 reports published up till now. So many reports… so much talking.
In face of these mounting numbers, it is still surprising to witness how many old people are busing abused daily by slick marketing agents, how business managers are taking organizational measures without taking into consideration its harmful effect on old people and how product designers are excluding old people from being able to use their products. Do this little experiment with me… ask to join an old person in his daily supermarket shopping tour and see how many products are unusable for him. I know that the normative argumentation holds little to many of the business community… so just imagine the market segments that are opening up these days by customising products and services to old persons. It’s time to stop talking and start doing… for real!
Head of the Corporate Social Responsibility Institute