21st Century Accountability – Don’t Forget the Moral Compass

by | Jan 18, 2010

jonathan wootliffGood citizens follow the law. The concept is simple: stick to a set of rules and stay out of trouble. But decent citizens also realize that the law alone does not dictate our every move. Other powerful forces – family, friends, colleagues, peers, moral values – play a role in determining how we interact with the world and people around us.

The same concept should hold true for corporations. Most follow strict financial guidelines and corporate governance standards. More and more companies monitor how their operations and employees impact the environment, local communities and the planet at large. But a small but growing number go a step further and listen to the voices beyond regulators and litigators.

If every company respected the environment and conservation imperatives, groups like Greenpeace, Friends of the Earth and Rainforest Action Network would be out of business. Perhaps it should become the corporate sector’s goal to make environmental activists redundant.

It is those companies that hold themselves to a higher standard, and go beyond compliance that enjoy the most highly regarded reputations. It is companies that go the extra mile that reap the rewards in the court of public opinion. And it is companies that voluntarily raise the bar that often unearth a myriad of commercially interesting business opportunities.

These are the companies that take a step back to consider what is right from wrong, how their actions impact the environment and where they are most vulnerable to attack from the eagle eyes of Civil Society – the myriad of advocacy groups and concerned individuals who rally around shared social interests.

Successful businesses have found a strong case for doing good and exceed baseline standards for a range of smart business reasons:

Meeting the expectations of many different stakeholders. Smart companies go beyond meeting environmental requirements and meaningfully engage with other critical stakeholders, including consumers, customers, employees, shareholders and activist groups. They have discovered that taking time to listen to concerns ensures the company receives well-rounded feedback and makes noticeable impact where it matters most.

Demonstrating a cohesive global strategy. Global companies operate under many jurisdictions and must follow environmental laws that greatly differ from one side of the globe to the other. By holding consistent moral and social positions in every part of the world, successful companies are viewed by key stakeholders as true to their word and principles, and thereby less vulnerable to attack or criticism. Businesses should surely apply the same environmental standards regardless of where they operate.

Staying ahead of the curve. Environmental laws and regulations are constantly evolving, and it’s up to individual companies to decide if they will follow the leaders, play “catch up” with competitors or take the initiative and lead by example. Companies that are well prepared to adapt to changing laws become “best practice” models in their respective industries and for the business world as a whole. In some instances, new laws and regulations are modeled after the practices of these trail-blazers.

Expectations and demands from society often well exceed those of law and policy makers. It’s the everyday citizen who has the most influence on business decisions – whether it’s the next “green” product to market or current environmental challenge.

Ignoring voices of concern can cause irreparable reputational damage. Companies must stay in touch with real-world critics if they are to truly succeed.

Understanding what society demands and not just what the law requires is a unique (but learnable) skill. It starts by being in tune with the wide range of environmental and other concerns of the world at large, and being in position to address them. Consider these business decisions based on societal demand:

Clorox stops using and transporting chlorine in the U.S.: To the delight of environmentalists and NGOs, most notably Greenpeace, The Clorox Company reported in early November 2009 that it is changing the way it makes its namesake bleach products. Clorox has declared it will stop transporting chlorine to U.S. factories by rail amid growing safety concerns and public scrutiny. The company said it plans to switch to high-strength bleach with a higher concentration of sodium hypochlorite instead of buying chlorine and making bleach onsite. Some may argue that the company needs to do more and should withdraw it use of chorine across its entire product range. But this is clearly a good start.

Coca-Cola rolls out new plastic bottles: In response to consumer concern about potentially harmful effects of BPA (bisphenol-A), a chemical used to make plastic bottles, Coca-Cola began the long-awaited global rollout of its PlantBottle in November 2009. The PlantBottle is made from a blend of petroleum-based materials and as much as 30 percent plant-based materials. The bottles are made from a process that turns sugar cane and molasses, a by-product of sugar production, into a component for PET plastic. In the future, the company plans to move away from food-based cellulose sources for its bottles to non-edibles like wood chips and wheat stalks.

Companies are increasingly waking up to the fact that good corporate stewardship means good business.

Smart businesses experience the positive effects of leading with a moral compass and not just by following the letter of the law. They understand that they are not just held accountable by environmental rules and regulations, but by the broader expectations of the consumers, families and communities they serve.

Above all, these companies know that a broader definition of accountability represents the only sustainable way of operating in today’s business world. Progressive companies realize that the 21st Century version of corporate accountability is here to stay and those who choose not to follow it will be left behind.

Jonathan Wootliff is the former Communications Director for Greenpeace International and now now heads the Corporate Accountability practice at Chicago-based Reputation Partners, where he works with global corporations to build effective corporate accountability strategies, particularly on environmental issues.

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