27 Dec Does Your Company Have a Social Responsibility Report?
According to an HRsoft webinar survey, just over half of HR and compensation professionals polled have read their company’s social responsibility report. More than a third – 38% – of participants don’t know whether their company has one.
If your company is public, it’s highly likely that it does have a social responsibility report. Many private companies do as well. Yet, until recently, corporate social responsibility (CSR) has been considered a “fringe” topic. That’s all beginning to change. In part, it likely has something to do with the concerns surrounding major corporations’ ethical practices, which have made their way into headlines within recent years.
Have You Seen These Headlines?
Many businesses have fallen under scrutiny for questionable pay practices – and, chances are you didn’t have to turn to HR journals to see the following headlines:
- Volkswagen caps executive pay after emissions scandal
- Regulators fined Wells Fargo a record $185 million… pressure put on workers to meet inflated sales goals… claws back millions from CEO
- Mylan CEO’s pay rose over 600% as EpiPen price rose 400%
Indeed, the conversation about HR issues is no longer confined to trade publications. Now, we’re seeing these topics featured in front-page headlines – but why? Let’s look at some of the historical factors that have gotten us here.
Old Ideas & Newer Debates
In 1970, economist Milton Friedman wrote an opinion piece which was published in New York Times. The article’s main argument is summed up in its title, “The Social Responsibility of Business Is to Increase Its Profits.” This straightforward notion – that the purpose of business is to make a profit and increase shareholder value – was embraced by many companies until very recently.
We truly began to see this shift gaining momentum when prominent CEOs started to share their perspectives on the matter. Paul Polman, CEO of Unilever, shared his thoughts in 2012, stating “I don’t think our fiduciary duty is to put shareholders first.” The controversial argument was taken a step further when Virgin Group CEO Sir Richard Branson added his two cents, saying, “…if you can put staff first, your customer second and shareholders third, effectively, in the end, the shareholders do well, the customers do better, and you yourself are happy.”
Of course, these were unpopular opinions at the time – these statements certainly don’t fall under things CEOs are “supposed to” say. Thus, the debate was still largely perceived as a fringe topic until January 2018, when BlackRock CEO Laurence Fink joined the conversation. With over $6 trillion in investments managed, BlackRock is the largest asset manager in the world. Fink issued a letter to CEOs, encompassing the following points:
- “Society is demanding that companies, both public and private, serve a social purpose…”
- “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
Later that month, BlackRock Vice-Chair Philipp Hildebrand echoed the CEO’s sentiments on a panel with Al Gore for the World Economic Forum, saying simply, “We have to change capitalism.” Gore agreed, saying that “companies that integrate ESG factors into their business plans perform better.”
Society is demanding that companies start paying attention to ESG (environmental, social, and governance) factors. And, if it hasn’t already happened in your company, at some point someone will ask how you’re integrating ESG factors into your HR strategy. By familiarizing yourself with the subject now, you can prepare to have that conversation when the time comes.
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