Following a week in which BBC executives in the UK have squirmed to offload responsibility in the wake of the vile Jimmy Savile child sex scandal, HSBC fights new allegations of unethical business practices in Jersey, and BP has agreed to $4.5bn in fines relating to the Deepwater Horizon disaster in the US, the case for corporate responsibility (CR) could not be stronger.
For BP, this is only an interim settlement. Clean Water Act claims could see the bill rise to $21bn according to the International Herald Tribune, while Bernstein Research puts the cost of the spill as high as $41.9-59.4bn. For HSBC, the offshore accounts scandal is just the latest in a series of systemic corporate responsibility failures—from involvement in Libor-rigging and the US subprime lending crisis, to mis-selling of payment protection insurance (PPI) in the UK and money laundering in Mexico—for which the company expects fines to top $1.5bn, according to CSMonitor.com. The long-term damage to its brand may be far greater.
These headlines showcase what happens when adequate safeguards are missing and a culture of unaccountability is allowed to grow. Of course it’s impossible to say problems like these won’t arise for companies with robust CR systems. But they’re more likely to be detected, less likely to go as spectacularly wrong, and can be resolved more swiftly, effectively and amicably when they do arise. CR has a vital role—in preventing things from going wrong as well as in helping to put them right.
Last week also marked the 60th anniversary of what is perhaps the greatest example of abuse and atonement. Since 1952, Germany’s post-war reparations program has paid out compensation totaling US$89bn to victims of the Nazis. During this time, the agreement has been altered to make it easier for survivors to claim and the German Finance Ministry and the Claims Conference—representing the victims—have worked as partners with the shared goal of reaching as many survivors as possible. For Julius Berman, chairman of the Claims Conference, it is less about money and all about recognition. For Werner Gatzer, leader of the German negotiations, it’s all about responsibility: Germany, he claims, will only have done enough when no more survivors remain. “As long as they live, we will uphold our responsibility.”* It’s a mindset the BBC, BP and HSBC could certainly learn from.
Five key steps can help companies stay on the right track:
- SUSTAINABILITY RADAR: continuously revisit your awareness of material issues, assessment of risks and regulation, grasp of global standards, and map emerging societal expectations.
- SYSTEMS RESILIENCE: ensure high-performance risk management, emergency response and business ethics programs are in place, supported by a positive culture of continuous improvement, where questioning and the precautionary approach are encouraged and rewarded. Integrate your sustainability priorities and values into your business goals and strategies so employees don’t face conflicting expectations.
- STAKEHOLDER RESPONSIVENESS: engage with relevant stakeholders around materiality and risk monitoring to increase awareness, improve management and build a shared sense of responsibility, partnership and collaboration for when things go wrong.
- REPUTATION & GOODWILL: don’t take trust for granted—it’s hard to put a value on it until it’s gone. Invest boldly in preventing CR lapses and make transparency a core principle.
- ACTIVE ACCOUNTABILITY: when things do go wrong, be the first to acknowledge it, and respond quickly and visibly to put things right. Direct efforts into finding out how it happened and ensuring it never happens again, not into trying to offload the blame or cover up misdemeanors.
Your bottom line will thank you for it.
*[IHT, Sat-Sun Nov 17-18 2012; p.3]