In a recent article on ftadviser.com Chloe Cheung discussed why business are becoming B Corps and within the article it highlights the fact that ESG investing is becoming more of a focus in the financial services sector.
There are a few observations that need to be made on this article, firstly ESG ratings are basically the sustainable equivalent to a credit rating, and as we all know, these can be very misleading.
There are currently no global guidelines of measurements for ESG, meaning any business can establish their own measurement criteria, which is to all intents and purpose meaningless.
The second observation is that, while B Corps are working towards changing the way businesses include social responsibility in their organisation, it can take considerable time to complete, hence the increasing numbers of ‘B Pending’ companies. The process is also fixed and doesn’t reflect the differences between organisations.
It’s also important to note that there is an alternative to B Corps in CSR-A.
The two accreditation bodies are both independent
This is essential as it ensures the business gets a true assessment of their social responsibility credentials. Both bodies are also aligned with the UN Social Development Goals, which allows organisations to show where they are concentrating their efforts.
However, the two bodies have a completely different approach to accreditation.
B Corps is based on getting businesses to change their governance and articles of association, while CSR-A is focused on people and organisational culture, helping to facilitate change by engaging all staff in an organisation.
B Corps works to a fixed set of questions that any organisation applying has to work through, while CSR-A has a ‘blank canvas’ approach to the application process which allows any organisation to provide the background and evidence for their social responsibility activity; this is then assessed by three independent panellists to determine if they have achieved the right standard.
There is no doubt that the two approaches will suit different organisations, some happy to commit the resource and time, and others who will be looking to get a result sooner.
One other point to note is that B Corps has chosen to limit the certification to profit-making businesses only, while CSR-A can be undertaken by any organisation, from business to charities, education to social enterprise.
The history of CSR
The origins of CSR can be tracked back to the mid 1800s in America.
The term was first used in 1957 by Howard Bowden in the US, but it is only now that organisations across the world are starting to wake up to the need to adopt it as part of their business strategy.
It is not helped by confusion around the terminology that has been adopted and how this has an impact. What is clear is that those businesses that are being proactive and implementing social responsibility strategies as part of their long-term strategies are seeing the benefits.
From increased demand for products and services to better staff retention and improved recruitment, being able to demonstrate your social responsibility credentials is now a must for all organisations.