Externalities, their actual or potential business impact and disclosure of related non-financial or financial information, are a matter of growing concern to sustainability and financial officers alike. The IIRC has a special take on this. Other than target audience (investors versus all stakeholders), the basis on which it differentiates the IR from the sustainability report is the suggestion that sustainability reporting “focuses on impacts on the environment, society and the economy, rather than on the effects of the capitals on value creation over time” (as is the case with IR).

This highlights a key distinction employed by a series of reports on the Economics of Ecosystems and Biodiversity in recent years, namely that between “impacts and dependencies”. The argument above suggests that sustainability reporters have tended to focus on the impact of their businesses on their external environment, rather than looking at this from the reverse perspective of considering more specifically the consequences of changes in the external environment on the business of the reporting entity itself.

In coming years, many companies will be asking themselves how the overall stock and flow of capitals, including Natural Capital, impacts their ability to create value in the short, medium and long term – as required by the IIRC Framework. The IIRC recognises the complexities of these developments, and the dilemmas that possible trade-offs between them or their components may pose businesses. It also recognises that much of the capital involved may fall beyond the ownership or control of a business. If material, key trends in its availability, quality and affordability needs to be reported.

The vulnerability of a business to natural resource changes is increasingly recognised. This is also the case with the forthcoming G4 version of the GRI Guidelines, including its core focus on the value chain. If a business were to treat Nature as a valued supplier, what are the capabilities and qualities of that supplier? What would an inventory of that supplier look like? Answers to this can be found in international research captured by the Millennium Ecosystem Assessment (MEA) and follow up reports such as the TEEB series. It among others provides latest scientific agreement on how supplies from nature can be best categorised, and what key trends in its current stocks and flows globally tell us. The lesson for some industries is that they may be out of business in the medium to long term. This relates, among others, to what a top US military official recently described as the biggest long-term security threat in the Asia-Pacific: climate change.

How can a business start to unpack its relationship to these developments? What are the key pressure points it needs to consider in defining strategic risks and opportunities for its own workings? In how far should it revise of rewrite its business model, considering its use of different Natural Capital stocks and services? What tools are available to facilitate its assessment and decision-making in this process? What qualitative and quantitative indicators are most relevant in determining how the use of energy, water, land, biomass and related resources by itself and its suppliers materially affect the viability of their collective enterprise? What exactly is the “integrated thinking” that investors would expect the business to reflect when it describes its business model and its relation to Natural Capital?

These are questions we will be tacking in a challenging brainstorm, with company case examples included, during a series of ACCSR seminars this coming June in Australia. Join us in ringing the opening bells for innovation and investment in Natural Capital.

Dr Cornis van der Lugt’s one-day program, “The Natural Capital Approach: Valuing Goods and Services from the Natural Environment” will be hosted by NAB in the following cities:

•         Melbourne         June 18
•         Sydney                 June 20
•         Brisbane              June 24
•         Perth                     June 26’

For information, http://www.accsr.com.au/html/2013_learning_naturalcapitalapproach.html, or email info@accsr.com.au

The explosion in the private sector’s importance since the 1980s is why companies now need to take the lead on sustainability.

The recent death of Margaret Thatcher prompted me to think of her broad legacy in terms of sustainability and corporate responsibility. One might not instantly associate her time in office with these issues but, at the global level, two things do stand out.

The first was that by opening the space for the private sector – some might say kicking the door open – she also inadvertently passed it the poisoned chalice of increased visibility and responsibility for its social and environmental impacts. In the process of liberalising markets and reducing the role of governments, business came more directly under the gaze of its stakeholders.

Thatcherism, and for that matter Reaganism too, was not the whole cause of the post 1990s increased tendency on the part of consumers and NGOs to direct their calls for change to business, but it was arguably an important factor.

Previously, concerns about international human rights and environmental issues were addressed to governments and UN agencies. As the flurry of treaties and conferences on these issues in the last decades of the 20th century shows, this was the golden age of internationalism. Governments were looked to not only to provide principles and direction, but also the regulatory mechanisms to implement their commitments.

Now we live in another age (silver? bronze?) characterised by the general failure of governments to effectively map out a practical regulatory response pathway to address climate and other sustainability issues, and to address the rising power of the corporate sector.

Under these circumstances, it is only to be expected that activists, consumers and others are balancing calls for more regulation with highly targeted corporate campaigns. New media and IT technologies have just made it all the easier.

She got science

Thatcher’s second legacy was support for science-based policy on global issues. As a chemist, she quickly got how issues such as ozone depletion and climate change could be caused. It should not be forgotten that she was among the first heads of government to come out strongly on the need for coordinated and decisive international action on climate change.

One doesn’t know what she would have made of the sorry story of the climate negotiations over the last decade, but the conviction and commitment to this issue she showed in office has never quite been matched by political leaders since. Angela Merkel, another scientist, is perhaps an exception.

Thatcher might well have been more pro-active than the current bunch in putting out the challenge to both political and business leaders.

Private sector dilemma

But the big “so what?” is this: in this post-Thatcher period, the private sector is on the horns of a dilemma of historic proportions.

On the one hand, it wants a light regulatory touch in order to harvest the abundant fruits of globalisation and a liberalised market economy. In short, a business as usual approach. Indeed, the discovery of (what is being pushed as vast) reserves of shale gas plays into a narrative of a new era of economic bonanza.

On the other hand, in the wake of the global financial crisis, a growing part of the business community now recognises that that crisis was triggered by dangerously liberalised financial markets.

The emerging consensus seems to be that we need more regulation, at least for critical issues that pose a systemic threat. And while this is true of finance, it is doubly true for social and environmental issues.

Many business leaders now realise that the “golden age” of the current resource and waste intensive model is coming to an end. Almost any materiality analysis for large companies now features game-changing mega-trend sustainability issues such as poverty, urbanisation, social unrest, energy, climate change, fresh water and food.

If key planetary thresholds are not to be violated, especially climate, and playing fields are to be kept level, this means agreements, regulation and governmental support to build awareness, good management and behavioural change.

The practical reality of these challenges was underlined for me at a recent business gathering in Geneva. Under the auspices of the United Nations Conference on Trade and Development (UNCTAD), the heads of corporate responsibility departments from some 26 mature and emerging market multinational companies from around the world came together to share experiences and workshop specific challenges.

Tougher challenges

While there were the expected sectoral and regional differences, a common concern was that companies were beginning to run out of drivers to improve CR performance. There was a perception that most of the low hanging fruit had been plucked.

The economic and social drivers for further action on the sustainability agenda were simply not present. Indeed, some were finding it increasingly hard to justify current programmes to CEOs, CFOs and investors pressing for short-term returns.

Although businesses are instinctively reluctant to call for increased regulation, it was clear that none of the participants saw any performance step-change forthcoming in the absence of new public-policy initiatives, whether in the form of taxes, investment or other legislation.

Indeed, many companies, while trying to address critical social and environmental issues, often feel a sense of frustration and are looking to governments to play a stronger role with targeted regulatory initiatives.

Public policy debate

While most hopes for change were pinned on industry-driven sector-based standards, where everyone from supplier to consumer talked the same language and did business on the mythical level playing field, there was a clear sense that this approach would not ensure that the planetary level social and environmental challenges would be addressed.

Indeed, as UNCTAD itself observed in a report to the G20 in 2011, without public policy, existing sustainability standards and initiatives will not achieve their potential.

It’s against this background that talk is now being heard of the need for greater governmental intervention. And these calls are increasingly coming come from those in the business sector that have inherited the liberal market world order that the Iron Lady helped usher in.

While the world continues to press companies to shoulder their responsibility, companies are now asking governments to shoulder their own responsibility.

Thatcher’s period in power marked the beginning of a pendulum swing in the direction of liberalisation. The financial crisis and today’s multiple social and environmental crises may be seen by historians as marking a turning point, where the pendulum begins to swing in the direction of more public sector involvement.

Far from fighting this trend, smart business leaders should recognise it as an opportunity. The very future of their business probably depends on it.

Paul Hohnen is Senior International Associate with ACCSR and Associate Fellow of Chatham House. Paul has been a diplomat, director of Greenpeace International and a director of the Global Reporting Initiative.

CSR and sustainability departments of emerging market and mature market multinational companies face very similar and familiar challenges. Internally, these include difficulties convincing CEOs and CFOs of the business relevance of CSR. Externally, there is mounting frustration with the ever changing landscape of CSR tools and the usefulness of such tools in responding to real business needs, especially in the current hyper-competitive market context.

While there are of course differences between multinational companies related to national, cultural and sector contexts – wherever their origin, they all need to be increasingly alert to the full spectrum of sustainability ‘mega-trends’ that are reshaping the global business environment. These were among the headline findings of a three-day peer-to-peer learning workshop in Geneva involving senior CSR officers from multinational companies based in countries as diverse as Argentina, France, Mexico, South Korea and Sweden.

The retreat, hosted by the UN Conference on Trade and Development (UNCTAD), was in part inspired by research suggesting that many multinationals in the emerging economies are successfully pioneering new approaches to CSR that were delivering co-benefits such as economic growth, social inclusion and reduced environmental impact. Participants identified what they saw as the main strengths and weaknesses of CSR and considered how it might be taken to the next level.

Standards

Companies are frustrated on two fronts. First, the inability of generic CSR standards to move from the broad “issue identification” phase to the “business implementation” level. While the latter is largely the responsibility of each business, there is a sense that more is needed at the sector and value chain levels to develop practical (and even certifiable) industry accepted standards. There is also a concern that standards are becoming too complex and changing too often to be genuinely useful.

Data management

One common challenge is how to optimise the business value of the increasing amounts of information being demanded (eg from stakeholders) or becoming available (eg from new media). Resource capacity and cost constraints are limiting the ability of CSR departments to “slice and dice” data optimally. One solution to this would be to develop comparable value chain data sets on key performance indicators, which could be use to drive performance improvements, including with SME suppliers. Commercially available software tools could be helpful in this context.

Reporting

While most companies use and derive some value from the GRI framework, the indicators need to be directly material to their business. Too often, indicators (eg on total water use) are limited, and are used merely in a tick box fashion. Many also feel there should be a link to financial performance that is currently missing, and there is hope that the proposed Integrated Reporting approach might help. The imminent release of the G4 GRI framework hasn’t alleviated concerns, with many viewing it as both too complex and too soon. Especially as companies from emerging economies in particular are still struggling to apply the G3 framework.

Business Strategy

Looking at survey findings of CEO attitudes, it appears many CSR experts believe that the conditions are not yet ripe for sustainability issues to be fully integrated into the business model. While low hanging fruit measures (for example, improving energy and material efficiency and stakeholder relations) are being taken to reduce costs, and more sustainable products and services are being launched, the regulatory framework does not provide the necessary incentives to make the major strides needed to further improve social and environmental performance.

Company, supply chain and sector-based initiatives are needed to explore how sustainability issues can drive future business growth and are the next big thing in strategic terms. While a supportive – and above all consistent – regulatory environment is ultimately essential, companies don’t need to wait to explore these emerging markets. Looking at the world through a CSR lens could be an efficient way of interrogating the robustness of current business models.

Looking to the future

CSR practitioners see a continued complex environment and a patchwork of diverse initiatives, as businesses, governments and others seek – with varying degrees of enthusiasm and success – to increase the environmental and social “goods” (and reduce the “bads”) within the boundaries of the current economic model.

There is a distinct sense, however, that the time has come to move beyond generic “what’s expected” CSR tools, to more granular supply chain focused tools. Initiatives such as the Sustainable Apparel Coalition and the Sustainability Accounting Standards Board (SASB) are examples of the emerging CSR 2.0, where businesses and stakeholders from specific sectors identify and define the material information for the particular sector and apply it uniformly along the supply chain. This might go a long way to meeting some the current problems with CSR.

At Rio+20 last year, governments again acknowledged the critical importance of sustainable business. But no one expects the necessary regulation in support of the future we want to be enacted anytime soon, and certainly in any uniform manner. And maybe that is not such a bad thing, for if CSR is to survive and thrive, it will ultimately have to be owned, driven – and judged – by the private sector, together with its stakeholders.

Paul Hohnen is Senior International Associate with ACCSR and Associate Fellow of Chatham House. Paul has been a diplomat, director of Greenpeace International and a director of the Global Reporting Initiative.

In his mid-twenties, Denny prided himself on ‘sticking it to the man’. He actively protested Vietnam, irresponsible business and, as he tells it, ‘what-have-you-got’. As a ‘prototypical child of the ‘60s’, his idealism was strongly ingrained and he was sincerely committed to the causes with which he was actively involved. But as he completed his MBA and took up his first ‘real’ job at Ford Motor Company, his priorities necessarily shifted from college activism to corporate day-to-day. He cut his hair.It is Denny’s background, his commitment to activism, social causes and ethics which makes his involvement in the Pinto case so unexpected. And so enlightening. When you meet Denny, when you hear his story first-hand –and he doesn’t beat around the bush about his involvement in a tragedy in which people died—you can’t help but think, “That could so have been me.”

Ford Pinto. Source: Wikipedia Commons

A brief recap: The Ford Pinto case

In 1970, the American car industry was struggling to invent a small, cheap car which would ward off looming competition from Japanese manufacturers skilled in the ways of the compact car. Thus, the ‘2,000’ Ford Pinto: 2,000 pounds in weight, $2,000 in price. The speed with which the Pinto was rushed through design and manufacture meant that when 8 out of 11 crash tests showed the Pinto’s rear-located petrol tank suffered potentially catastrophic ruptures, it was deemed too expensive and too time consuming to change the design. Even with the failures, the Pinto was within the safety requirements of the law. Plus, a redesign would mean less boot space.

In perhaps the most infamous example of cost-benefit analysis gone wrong, Ford determined that the fatal design flaw could be rectified at a cost of $11 per gas tank. Numbers were crunched to arrive at the following formula:

Source: Gioia, 1992.

The Ford figures showed that the costs of a design fix far outweighed the benefits, measured based on the insurance costs for death or ‘burn injuries’. As Gioia points out in his fascinating 1992 reflection on the case, “The philosophical and ethical implications of assigning a financial value for human life do not seem to have been a major consideration in reaching this decision.”

As Ford’s Field Recall Coordinator, Denny had direct involvement in and authority for decisions made about which cars stayed in the market. Now a professor in Pennsylvania State’s widely respected Smeal College of Business, Gioia describes his role at Ford as the busiest and most information-intense one he has ever held. On commencing the role, he inherited hundreds of existing safety cases which would keep him awake at night. Sometimes, the sheer volume of information would lead him to confuse the details of one car case with another. Eventually, he concluded that the only way he could function effectively in the role was to disconnect himself from the emotional concerns which played on his conscience and approach the mountains of data and decisions in a ‘dispassionate’ way.

In his late twenties, Gioia found himself in a position no one would envy. In order to do a job which necessarily required a sensitivity for people’s safety, he found himself having to become desensitised to that very issue to allow him to perform the role. Catch-22.

The notion of fault inevitably enters these discussions, and this one is no different. Was Ford at fault for creating a role which inhibited the incumbent from functioning in a manner necessary to uphold human safety? Where were the lines of support and appropriate resourcing? Was Gioia responsible because he allowed himself to become dispassionate? What about the designers who compromised on design? Or the safety testers who knew results long before they were released widely within the company? The buck stops where?

Schemas, heuristics and other scary, psychological words

Reflecting on his experiences at Ford over many years, Gioia eventually found reason in the notion of ‘cognitive schemas’. In a nutshell that would cause my Psych 101 prof to sigh with disappointment, schemas are the mental patterns we use unconsciously each day to allow us to function effectively in the world. Do you actively think about the steps you take each day to make your breakfast? No? Welcome to your life of cognitive schemas.

For Denny, the development of heuristics—mental shortcuts—was essential to his ability to perform his role. In terms of the Pinto, all his available patterns and experiences suggested that the case was not a red flag. At the time, high frequencies of occurrence were low, the tests were within legal limits and comparable to similar models in the market, drivers were believed to accept a degree of risk in purchasing a car, and there were no ‘directly traceable causes’. Denny’s cognitive schema allowed him to process the Pinto case and move on to others.

And therein lies the danger and the warning for us all.

A ‘Living Case’: Learning from our past to teach our future

In his Penn State classes, Denny presents the Pinto case to his MBA students. He asks them to raise their hands if they believe they would have acted differently and, inevitably, he is faced with a sea of upward thrusting arms, each student smug in her ethical capabilities. At the end of the discussion –in which past students have commented to the effect that “Those bastards should be lynched”—Prof. Gioia does the big reveal. “I was that guy.” Man, would I love to see that.

Denny’s willingness to reflect on and then present his experiences of a highly controversial—and what is surely also a personally traumatic case—is both brave and generous. Few are comfortable with our own fallibilities, and many of us will never face blame for the death of others. He calls teaching the Pinto experience a ‘living case’ and advocates the method for all teachers and facilitators.

Many of us have been placed in situations which challenged our values, ethics or ideals. Few of us would stand in front of a group and admit it. Yet there is so much to be learned.

Dr Sara Bice is Research Fellow, Centre for Public Policy, University of Melbourne and is a Senior Associate of ACCSR. Her dad drove her to school in a 1972 blue Ford Transit van with a boss eight-track.

One quarter of Australians would be willing to switch superannuation funds to avoid investing in coal or coal seam gas, according to a recent survey. Not only does this research raise important questions about the coal/coal seam gas industry’s social licence to operate, it poses new questions about the level of demand for ethical superannuation.

The research, commissioned by Market Forces, a Friends of the Earth initiative, showed investor willingness to shift funds away from coal-based industries is spread relatively evenly across age and income groups.

So, is there a groundswell of investors willing to put their retirement cash where their personal values are?

A broader 2008 survey found that about half of respondents were concerned about their superannuation fund’s attempts to address climate change through investment decisions. Viewed alongside these most recent survey results, the findings suggest that there is a steady pattern of public concern. But public action does not appear to be escalating when it comes to changing superannuation funds to reflect individuals’ environmental ideals.

The commissioning of the survey in the first instance does, however, reflect the growth of organised campaigns for ethical or socially responsible investment (SRI), including by groups like Asset Owners Disclosure Project and the Climate Institute.

SRI is an extremely tricky area for both investors and superannuation funds trying to “do the right thing”.

For investors, choosing to have their funds redirected from investment in companies whose activities they cannot morally or ethically abide– whether it be coal/CSG, tobacco, sweatshops, gambling or guns – provides a means to ensure guilt-free sunset years. No one wants to upholster the campervan with retirement funds derived from child labour.

For super funds, SRI raises complex questions about investor returns. Fund managers bear the great responsibility of ensuring their members receive the best return on investments to secure a good retirement. Many of Australia’s leading superannuation funds approach optimal investor return as a moral duty. They see the financial security of Australians as an obligation.

Analysts disagree on whether investment portfolios defined by socially and ethically responsible principles achieve returns equivalent to portfolios without these criteria. A recent US study found “sinful” investors to be outperforming their angelic counterparts, comparing VICE (e.g. funds invested in alcohol, tobacco, gambling and guns) and SRI indices over the long-term. But other researchers argue that socially responsible companies will ultimately outperform their naughty counterparts whose stock prices will eventually be dragged down by the weight of scandal, financial misbehaviour or government censure. Even more recently, the Australian Financial Review (paywalled) reported that, since their inception 20 years ago, SRI indices perform about the same as the traditional market.

How then, do superannuation investment managers balance their obligation for greatest return on investment with individual members’ personal values? Perhaps the even more difficult question is, should this be the funds’ concern?

To a degree, improvements in active investor management, especially through the offering of specialised portfolios or ethical funds, is helping to respond to this challenge. By allowing members themselves to choose investment options based on personal beliefs and preferences, superannuation funds maintain their commitment to best retirement outcomes, while devolving decisions about types of investment — and consequent levels of return — directly to the consumer.

But member disengagement with their super funds is a widely recognised concern. Despite the recent survey results, most superannuation members are unlikely to change funds or lobby for climate sensitive investment criteria. For the majority of their members, fund managers must interpret and act on the market on behalf of investors who may not understand their choices nor care about their decision-making processes.

Many funds promote financial literacy programs in an effort to encourage greater investor involvement with their funds. But studies show that members’ financial literacy remains low. Faced with overwhelming choices in a market they cannot read, investors show little interest in understanding net present value (NPV) or deciphering earnings before interest, taxes, depreciation and amortisation (EBITDA).

Many Australian super funds are taking their own positions against climate change within this conflicted investment space. Several major funds are members of the Investor Group on Climate Change which urges funds to consider climate change-related risks and opportunities for climate change mitigation when making investment decisions.

The voluntary United Nations’ Principles for Responsible Investment provide further guidance for signatory super funds. The first principle commits signatories to “incorporate environmental, social and governance issues into investment analysis and decision-making processes”.

A growing number of Australian super funds are also being guided by sustainability reporting, with the widely used Global Reporting Initiative asking fund managers to report on screening for environmental and social risks in their portfolios.

Shareholders and investors hold significant power to influence corporate behaviour. This power is negligible, however, without direct investor action. Meanwhile, many superannuation funds will continue to implement decision-making which balances member returns with social and environmental concerns. But real action against climate change requires individual investors to become better engaged.

Dr Sara Bice is a Research Fellow at the Centre for Public Policy at the University of Melbourne, and a Senior Associate of the Australian Centre for Corporate Social Responsibility.

Last week, Metgasco announced that it was suspending its coal seam gas (CSG) exploration activities in northern New South Wales. While this news disappointed some who were anticipating economic benefits, it has delighted the many activists who have been campaigning against CSG in the region. Indeed, they may see it as vindication of their sustained efforts. So, is this outcome an example of the power of social licence in action?

Until recently, social licence was a term used by corporations and governments, typically to describe ongoing approval or acceptance of local communities for mining operations. Lately, however, community members and groups campaigning against operations have appropriated the term, most usually to claim that a particular operation/company does not have one. Since social licence is an intangible concept with no legal status, it is impossible for either company or community to prove that it does or does not exist. In other words, a battle of words ensues, with no clear means of resolution.

In the Metgasco case, until yesterday it appeared that the company was able simply to ignore all opposition, on the basis that a legal exploration licence was sufficient. Yet opposition has been relentless. As local MP Janelle Saffin stated yesterday, Metgasco has been “told loudly and clearly and almost daily that they’re not welcome”. She added, pertinently: “You also need a social licence to work and operate in the community in which you are“.

The concept of social licence here appears to have empowered local communities to stop an activity. Indeed, this case is likely to encourage other activists to adopt the social licence concept strategically to oppose projects. But what are the drawbacks to these developments? Two come to mind.

Firstly, it is notable that Metgasco itself did not cite community opposition as a reason for its suspension. It did not claim to be “listening to the concerns of the community”, or indeed acknowledging that its social licence had been eroded or lost. Rather, in a statement to the Australian Securities Exchange, it cited “the uncertain operating environment” created by new state government regulations, and argued that the decision was “to preserve shareholder value”. Further, it stated that it intends to resume operations once “regulations are firmly established”. In other words, it is not clear that companies themselves are willing to talk about social licence when its existence is contested, as though it becomes mysteriously irrelevant when it is threatened.

Secondly, is the language of social licence encouraging a race to the bottom? Debates around the impacts of CSG mostly revolve around serious concerns regarding potential environmental degradation, notably to underground water. Opponents’ claims that Metgasco did not have a social licence derived from a belief that significant damage could occur, rather than from a belief that Metgasco was not quite delivering optimum social and environmental outcomes. Social licence was invoked, in other words, only because performance appeared to be particularly poor.

The social licence concept clearly has some merit, as long as it complements rather than replaces the more traditional concepts of corporate social responsibility and sustainable development. The Metgasco case suggests that social licence risks becoming the least ambitious of these concepts, and that an aspirational conceptualisation is needed it is to be genuinely oriented towards social development and environmental stewardship.

Dr. Richard Parsons is Principal Consultant at Richard Parsons Social Research and Consultancy.

Corporate Social Responsibility (CSR) is a concept embraced in theory, even if its implementation can mean many and varied things from small acts of corporate philanthropy to an all encompassing CSR strategy.

Yet, new research shows that there are still many obstacles in the quest to embrace CSR by companies – a lack of time being, in the case of New Zealand business – the most stubborn.

A range of New Zealand companies took part in the latest State of CSR in Australia and New Zealand Annual Review 2012/13, indicating clearly that in a time of global distrust of large institutions, CSR was important – and the uptake of CSR by business leaders critical.

But time constraints, combined with a lack of resource and a tendency to focus on the short-term, meant CSR remained more a discretionary activity than a central strategy for most New Zealand business.

This was in marked contrast to Australia, where those responsible for getting buy-in for CSR strategy in the corporate environment report the greatest obstacle they faced was a lack of ‘organisational buy-in’.

In other words, Kiwis want to embrace CSR but they are too pressed for time and under-resourced. Aussies are resourced to implement CSR, but can’t always get the senior-level buy-in.

This might be most clearly illustrated in the area of climate change.  New Zealand has had several years to get used to an Emissions Trading Scheme, and so reducing or eliminating a business’ negative environmental impact remains a top priority, perhaps in the absence of a wider, and more all-encompassing, CSR strategy.

In Australia, a new carbon pricing scheme is still pretty controversial, and business is grappling with it.  Environmental issues on their own are not a top priority across the Tasman; instead, getting buy-in and internal understanding for CSR is a major bugbear.

The Review clearly demonstrates that leadership in the area of CSR not only enhances the recognition and reputations of the companies that embrace it, but provides an inspiration for other companies to follow.

Companies like Rio Tinto, Westpac and National Australia Bank have been ‘set apart from the pack’ for their willingness to make sustainability part of the business proposition and ‘walking the talk’ – embedding sustainability practises in all facets of their business.

In New Zealand, sustainability leaders also exist. Companies like Ricoh and Toyota have charted a new course for business in this country by embracing CSR – driving productivity through increased business value and better employee engagement.

The best managers know the importance of CSR, of course, but sometimes they and their top team need a friendly nudge.  The Review’s survey of 160 Australasian CSR professionals turned up the best tactics for overcoming obstacles to getting CSR front and centre of operations.

Those include:

• Linking CSR strategy to business strategy
• Increasing stakeholder engagement
• Enlisting senior management support
• Implementing CSR-related key performance indicators for staff, and
• Identifying CSR champions.

For the full report and more commentary, see www.accsr.com.au

Nikki Wright is Managing Director  at Wright Communications.

The dialogue around mining and coal seam gas is distressing.

I live in a community looking down the barrel of a massive expansion of mining.

Holes will be bored and dug on the doorstep of our town, and in our farmers’ backyards.

Yet we are told by the state and by mining companies  the resources that could destroy our town are the property of NSW.

We are told  we have no rights if the state allows miners to take them.

We don’t dispute the public ownership of the coal and coal seam gas.

We welcome opportunities for economic development.

What we resent is a process that ignores the enormous historic investment our community has made in local economic, social and environmental capital.

The assumption is  our investment can be trashed, providing the government gets its royalties and the company can generate a profit.

Here is the problem. The arrangement to mine should be between the state, the mining company, and the community where mining will happen.

But the state has  marginalised the local community to the point where we have no voice.

Without a voice we have no protection against rapacious companies wishing to plunder community capital to fill their coffers.

We will have to face the dust and noise, live with the known health effects and worry about the unknown, see our properties devalued or consumed, and fall out with our friends and neighbours.

We will watch as the land, water and ecosystems on which we have always relied are systematically and irrevocably undermined.

We will be there long after the miners have moved on.

Yet we have absolutely no say in the matter.

Our capital can be robbed without compensation – without so much as a ‘‘By your leave.’’

There will be enormous social pain and unrest as long as this  unjust situation persists.

The companies can hide their brutal practices behind their paper licences and we will  pressure on politicians to rein them in.

The state will respond with knee-jerk decrees, create more useless and expensive bureaucratic process, and entrench the toxic atmosphere of fear and distrust.

There is a way around this.

Instead, companies and communities could sit down together from day one and try to build a respectful and productive relationship.

A relationship that recognises the state’s right to sanction mining and the community’s right to protect its capital and influence its own future.

This process of generating a ‘‘Social Licence’’ would subvert the  adversarial power struggle.

A social licence would try to reach agreement on the conditions under which a local community would be willing to host a mine on the state’s behalf.

With each mining project and each community, the nature of the social licence would be different.

That’s exactly its power – the potential to resolve so many apparent difficulties at the level where the miner’s shovel meets the farmer’s soil.

The social licence is not about gouging the miners for profits, or providing another regulatory roadblock.

Instead it offers a way to negotiate the  challenges  mining presents to the  definition of who we are as communities.

Nor is the social licence a tick-a-box exercise.

It needs to be earned and more importantly maintained.

As the community owns it, it will need to integrate our values.

It must build trust and work towards a sense of co-ownership.

In the end, companies will need two licences.

The statutory licence to protect the interests of the people of NSW, and the social licence to acknowledge the concerns and aspirations of the local community.

In the end, the state must let us back to the table.

Aled Hoggett is a Gloucester Shire councillor.

Yet, for many years now, CSR has become part of everyday corporate lingo. (Who else is sick of hearing that it is in the DNA?) As Professor David Allen questioned last week at the ACCSR Annual Conference, if we are all doing CSR, why are we doing so badly?

In fact, inspired by the Great Recession and recent large (and very large) corporate scandals, this year we decided to focus our Annual Review of the State of CSR in Australia and New Zealand on what constitutes responsible leadership. In our view, responsible leaders do not only transform their organisations, but also have a broader breakthrough effect that can benefit the entire society. So what are the attributes – how does it happen – what makes responsible leadership?

What makes responsible leadership?

We asked CSR practitioners in Australia and New Zealand and found two rather different views. When respondents talked about leadership in other organisations, they mainly pointed to companies that demonstrate and integrate CSR – or, in other words, walk the talk. However, when respondents looked at instances of leadership in their own organisations, they mainly looked at philanthropy and community investment – which denotes a more traditional understanding of CSR that might be a low-risk, easy-win.

Perhaps this is just another example of asymmetrical information: what is admired in others does not have the same resonance when looking at oneself – simply because we know more about the challenges in achieving change within our organisations than about others’. Therefore our expectations and perceptions of others tend to be higher than those of ourselves. (It’s not you, it’s them.)

Furthermore, a relatively large number of respondents (14%) said that their organisations had no instances of responsible leadership. This is worrying. And intriguing.

So we dug a bit deeper: what are the priorities and obstacles for the most immediate future?

Interestingly, for the fifth year in a row, respondents mainly pointed to building internal buy-in as the main priority and as the greatest single obstacle. This looks like a vicious cycle: practitioners want to mainstream CSR in their organisations – and know that the best driver of such change is to gain internal buy-in – which is also the most significant challenge standing in the way of embedding CSR into everyday business – which is possible if there is internal buy-in – but that is the main hurdle to…

So, how to overcome this? We asked respondents to identify which tactics they use and which of those work best for building support and making the business case for CSR. We listed 13 tactics and all of them were rated fair to good in terms of effectiveness.

As we had expected, the tactics that were both the most popular and rated as the most effective included ‘Enlisting the support of key management or influential people’ and ‘Increasing stakeholder engagement’.

But what mainly caught our attention was to find that two tactics were used less often than average, but regarded as more effective than the average:

First, ‘Identifying organisational performance indicators and measurable targets’ might not be as frequently adopted since it requires the existence of data collection and management systems. But when enacted, it is an effective tool to drive sustainability performance and provide evidence to support the business case for CSR.

Second, ‘Introducing CSR champions’ might be used less often simply because it requires employees to take on more responsibilities in addition to their currently assigned tasks. But such voluntary personal commitment seems to effectively contribute to advancing CSR internally better than most of other more popular tactics.

Volans’ most recent project looks at capitalism nearing a point of no return, where the only two options seem to change or, sadly, fail. For the latter, we need do nothing but wait and see – we are already doing great at that. For the former, we need bolder, more responsible, breakthrough leaders capable of changing the way things are done to drive long-term success – starting in their own organisations.

As the clock is ticking, we hope that our research encourages more discussions about how to further develop responsible leadership – so, what do you think? What can we do to leverage responsible leadership?

Miguel is a Consultant with ACCSR, mainly focused on strategy and reporting – and aiming for sustainability beyond buzzwords.

This year our 6th Annual Conference ‘The State of CSR’ explored the issue of leadership in an age of  responsibility. Our speakers inspired and challenged us with endless ideas and hints we all are still thinking about.

Thanks to everyone who took part in the live twitter conversation using #ACCSRConf, we have curated a Storify summary with the key highlights, thoughts and questions we gathered during the day.

This is a live story and we will be looking forward to hearing from your ideas to keep on nurturing it. So, what’s your view on responsible leadership?