The corporate responsibility movement (within and beyond firms and funds) has in recent years reflected at some length on the utility of public reporting on human rights impacts.
In an ideal and informed market, a firm's commercial value should partly depend on its social values.
How does externally-oriented reporting loop back to internal changes in strategy? How does one move socio-enviro impact issues from the periphery to the boardroom? How do those charged with improving social impact get themselves seen, on the inside, as important value-enhancers -- rather than being 'relegated' to the public relations / communications department?
Where it is not required by regulation, what is the commercial ('business case') for reporting to the public on existing or emerging human rights and social impact problems?
For many firms, there is something of a 'damned if you do / damned if you don't' dilemma here.
The obvious recent example is the reaction to Unilever's proactive approach to the human rights impacts relating to its operations and supply chains.
Unilever's CEO is a world leader in this respect. Yet not all market analysts approve of him airing, as it were, the 'dirty laundry' of adverse human rights impacts that the firm's internal processes find existing in the supply chain.
Whatever the legal-litigation and other considerations, from a corporate strategy (both brand protection / promotion, and general risk management) perspective, there is a strong argument to be made that those firms which make proactive efforts to 'know and show' the shifting map of their social (and enviro) impact are more likely to identify and pre-empt commercial and 'non-financial' risks, reinforce brand integrity, and so on.
What will it take for this strong argument to become (as Australians say) a 'no-brainer' -- beyond argument?
Achieving supply-chain integrity in social impact terms is very hard, especially for global multi-goods firms.
Firms that are honest about the complexity of these issues and display good faith efforts to address them may find customers, consumers, suppliers, investors, insurers and others far more forgiving than those which adopt, in effect, an 'ignorance is bliss' approach.
Ignorance is risk. Transparency is in -- this vague but undeniable norm of some sort, from Beijing to Brussels. Shielding is ever-harder, and a bad look.
One question is what it will take for these issues to level out such that other firms do not look at the reaction to Unilever's reporting and decide to keep their heads down. What incentive structures can shift the game so that there is only a 'damned if you don't' position?
Last week I heard John Morrison talk of the incentives (regulatory, market, consumer, corporate governance and other) required for moving these issues into the 'pre-competitive' space. That is, taking them out of play in terms of what firms see as the competitiveness downsides of greater proactivity and transparency on human rights impacts.
This blog is going through some transition as I settle into a new academic role.
A previous post reflects on these issues: here.
In the meantime, I can do no better on this topic than to promote Rachel Wilshaw's recent piece for a well-known Oxfam-related blog, on the Unilever report : see here.
Jo
