Progress continues towards greater corporate responsibility

Joaquín Garralda. Professor. IE Business School

2 October 2006

Corporate responsibility has taken centre stage in the business world. For many companies, the greatest concern is whether CR is an expense or an investment. How management committees view this question directly conditions the amount of resources devoted to CR activities.

When a new trend emerges in the corporate world, the debate it provokes within the media provides vital information for companies seeking to shape their policy response.

A case in point is the influence of media debate on the trend towards greater corporate responsibility (CR). Many of the debated questions over CR have run full course and now hold little interest for the public; others rage on because their impact is still unclear.

The debates over what CR is, how it differs from other concepts (such as CSR, ESR, social action and sustainability) and whether it is really necessary are of little interest to those who are either in the know or are directly affected.
A recent report by a parliamentary sub-committee on labour and social affairs has set the tone for the debate on whether corporate responsibility should entail self-regulation or regulation by law. The committee concluded that the administration’s role is to introduce measures aimed at encouraging self regulation on the part of companies. “If companies fail to earn a return on their efforts and on their investment, which is a legitimate and positive (expectation), their commitment to ESR will decline significantly,” it said in the report. (Page 9).

There is little more that can be said to help convince sceptics that CR is more than just a passing fad. Nonetheless, there are two debates that could contribute further to advancing the CR cause: Whether its application should be considered an expense or an investment and whether a company should seek to publicize its efforts at being socially responsible.

Without a doubt, society today demands more from its companies, though just how demanding often depends on several factors. Two obvious ones are the size of the company and the degree of its internationalization. However, other less obvious factors also come into play-- depending on the sector in which the company competes--when determining the effectiveness of CR activities.

Regardless of their sector, large companies and multinationals have similar codes of conduct when it comes to CR. However, for most companies that are not leaders in their sector, and have little visibility in the media, the greatest concern is whether CR is an expense or an investment. How management committees view this question directly conditions the amount of resources devoted to CR activities.

Once the committee has determined whether CR is an expense or an investment, deciding what spin to give the news is easy in terms of efficiency.
In conclusion, though much has been achieved, much still remains to do. The main challenge ahead is to focus the debate on the exceptional aspects of CR, because companies will always have to employ their resources as efficiently as possible if they are to survive in the long term.

Video

Dean Martha Thorne discusses her thoughts on the Pritzker Prize 2017

See video
Follow us
IE Focus Newsletter
IE Agenda
Most read
IE Business School | María de Molina 11, 28006 Madrid | Tel. +34 91 568 96 00 | e-mail: info@ie.edu

Contacto

IE Business School

María de Molina, 11. 28006 Madrid

Tel. +34 915 689 600

info@ie.edu