The most effective way to create change that benefits humans above the bottom line is to combine social change efforts with the profit motive under the umbrella of a multinational corporation.
So writes Timothy J. Mohin in his new book Changing Business From the Inside Out: A Treehugger's Guide to Working in Corporations. And with an eighteen-year career in the field known as corporate responsibility (CR), he provides a wealth of knowledge to back up his claim. Mohin has helped lead efforts to reduce perfluorocarbons (PFCs) in the semiconductor supply chain, provide online English lessons to Chinese factory workers, and battle human rights abuses in the mineral trade in Central Africa. In all three cases, he succeeded by tying social benefit to brand image and corporate profitability. Or, as he writes in the book: "Here is the equation: corporate responsibility is about half of company reputation; reputation is a big part of your company's brand value; your company's brand value is the largest intangible asset on the company balance sheet."
It's a formulation that has been gaining ground in corporate C-suites and boardrooms for some time now, leading to rapid growth in CR programs. Indeed, according to the Global Reporting Initiative (GRI), more than fifty-five hundred companies issued sustainability reports last year, compared to eight hundred just ten years ago. What's more, the Foundation Center reports that corporate foundations awarded $5.2 billion to nonprofits and individuals in 2011. No surprise then that companies which once spared no effort to fight environmental laws are now working to earn high scores in sustainability rating indexes.
Yet beyond the prestigious Dow Jones awards and the glossy press photos of smiling recipients, creating lasting and effective change from inside a company remains a challenge. As Mohin explains, CR programs often are far from comprehensive in addressing all the issues related to a company's social and environmental impact, and establishing new programs that move beyond legal compliance and marketing spin is often a push-and-pull affair when it comes to corporate executives and stakeholders.
Complicating the situation is the fact that the role of the CR manager may be as broad as the definition of "responsibility" itself and can include things like resource conservation, workforce diversity, corporate giving and volunteer efforts, product safety and recycling, energy efficiency, sourcing and waste disposal, public relations, human rights, governance, and/or ethics.
Similarly, the CR manager is expected to work with and sooth activists, nongovernmental organizations, and nonprofit leaders while negotiating with corporate leaders to adopt sustainability goals where the return on investment may be difficult to quantify. And she or he has to be comfortable with ambiguity, understand a company's core values, be able to communicate technical information to concerned parties, and collect data from a wide range of departments that often have little incentive to provide it. Which is why Mohin compares the position to being a "designated driver at a cocktail party."
Mohin began his career drafting amendments for the 1990 Clean Air Act, and he acknowledges an inherent tension in his thesis when he credits nonprofits, activists, and government with launching the CR movement and with continuing to influence corporate agendas through targeted campaigns and new legislation. He then traces the history of the environmental movement from the federal legislation of the early 1970s through the start of the Occupy protests in 2011 and argues that corporations more often than not have reacted to external events and forces, with CR programs typically being launched as a form of damage control in response to a costly public relations debacle or environmental disaster.
For example, semiconductor giant Intel Corporation, which gave Mohin his first CR job in 1995, formed its corporate responsibility program in response to the backlash over revelations it had dumped volatile organic compounds that then leached into groundwater supplies. The company invested millions of dollars in pollution controls and product changes, and Mohin, who became a global sustainability leader at the company, contributed to the formation of the World Semiconductor Council, which eventually called for a voluntary phase-out of PFCs. This year, Intel ranked fourth on CR Magazine's 100 Best Corporate Citizens list.
Mohin eventually left Intel and moved to Apple, where he started and led the Supplier Responsibility Program, focusing on the supply chains for the Mac, iPod, and iPhone product lines. As part of the audit process in China, he slept in factory dormitories to observe conditions there and interviewed (with the help of a translator) workers. His efforts eventually led to the establishment of English courses for factory workers and other measures designed to improve the company's labor practices. (Apple suppliers such as Foxconn have continued to attract scrutiny, including allegations of forced student labor, since Mohin left the company in 2009.)
For his part, Mohin views the relationship between companies and suppliers as an opportunity to create more change. "When a serious violation is discovered child labor for example it is far preferable if the supplier fixes the problem, rather than simply ending the business relationship," he writes. "Ending the relationship leaves the problem unresolved and may even make conditions worse."
Now director of corporate responsibility for Advanced Micro Devices (AMD), Mohin works to reduce human rights abuses related to the mineral supply trade in the Democratic Republic of the Congo. Indeed, he argues that volatile situations like the one in the DRC are the ideal place for an activist to improve social conditions, although at times "you may feel like a metronome — vacillating between the euphoria stemming from your laudable accomplishments and the dejection from the feeling that your role in the corporate power structure sits somewhere between superfluous overhead and oblivion."
Still, despite his generally optimistic view, Mohin provides lots of reasons for skepticism about the ultimate value of CR work. One frequent criticism of such programs is that they are too focused on image. Indeed, one of the largest components of any CR job is the production of the annual corporate responsibility report, in which activities like water use reduction, green building design, and employee volunteerism are documented and the corporation's responsibility goals are shaped into a "story." While many of these metrics are important, writes Mohin, such reports typically serve as a marketing tool rather than an objective evaluation of the company's CR activities and overall impact.
There's also the question of scale. Even multi-million-dollar CR programs have only a small claim on a corporation's overall budget, with the programs often appearing as an afterthought rather than as a force for real change. For example, Mohin applauds the Coca-Cola Company for publicly setting goals to fortify its beverage products with nutrients, use natural sweeteners, reduce portion size in areas with high obesity rates, and support efforts to reduce caloric intake in the U.S. But the company continues to make the bulk of its profits from the sale of sugary drinks.
Yet another area of concern is that companies are earning praise for changes that may originate in external forces such as technological change, customer demands, or industry mandates, leading critics to legitimately ask: Should corporations be congratulated for doing what the law says they must do and/or for cleaning up their own messes? And while Mohin convincingly makes the case that CR programs are good for the bottom line, that doesn't necessarily mean they are good for communities.
Still, Mohin holds out hope for what is still an emerging (and increasingly global) field. "While there is a strong argument that the excesses of industrialization have led to many of the social and environmental problems we now face," he writes, "there is an equally strong point that business will also produce the solutions."
As proof, he points to the growing number of incentives — from financial rewards, to disclosure and regulatory laws, to public shame campaigns and/or recognition — for providing those solutions. Elsewhere, socially responsible investing (SRI) funds are uniting CR goals with the profit motive in new ways, he writes, noting that investable assets in SRI funds now total some $3 trillion and are growing twice as fast as assets in more traditional funds. Similarly, laws enacted after the 2008 financial crisis have brought an increased focus on business ethics, and sustainability ratings like the Carbon Disclosure Leadership Index and the Human Rights Campaign's Corporate Equality Index now offer independent verification of CR successes.
Moreover, the growth of corporate responsibility is occurring across industries as well as within supply chains, with changes at one company often leading to changes at its competitors. This happened in the retail apparel sector following allegations leveled at Nike and Gap over sweatshop conditions in their Asian factories, and it's happening again in the consumer electronics sector, where Apple has become a target of labor and environmental activists.
Mohin even believes that his new job at AMD working with mineral suppliers in Central Africa represents a profound shift in the CR field. "The standard reaction to issues like this used to be that they were too far removed — too many steps down the supply chain — for most companies to get involved. But, because of the scale and seriousness of the human rights abuses, the fact that activists have effectively linked these issues to the electronics sector, along with the recent enactment of the Dodd-Frank law requiring due diligence for sourcing these materials, the issue is now at the top of my priority list."
And so, as the once oppositional forces of social justice and the profit motive continue to move toward each other, Mohin argues, more activists will be needed to help steer corporate resources toward the creation of social good. "Corporate responsibility acknowledges the world the way it is, dominated by companies with revenues and global power beyond the wildest dreams of most nation-states," he writes. And if activists are successful in integrating CR objectives into corporate business plans, supplier RFPs, and executive compensation schemes, he adds, CR has a real and almost unlimited potential to create change.
Unfortunately, the evidence he marshals to make his case supports a more ambiguous conclusion. True, corporate responsibility programs aren't making the world any worse, and, at their best, they may be contributing to change within corporate cultures and doing some good. But whether multinational corporations can actually drive greater social change than the activists, nongovernmental organizations, and governments that have been pushing them to adopt a responsibility agenda for decades remains to be seen.