Tipping at Silos
By Nate | March 13, 2007
One of the great challenges of any business function is overcoming functional silos and working in a more integrated way with the organization as a whole. This is particularly difficult for functions, like ethics and corporate responsibility, that in many companies were either created or have grown as a response to external stimuli or events (can anyone say "Federal Sentencing Guidelines" or "Enron"?) The newest print edition of Ethical Corporation magazine carries a piece I just wrote addressing this issue. It identifies the desire on the part of ethics and corporate responsibility professionals to become more fully integrated into the core business of their companies. But it also identifies some promising developments that suggest movement in that direction. Have a read and let me know what you think.
Comments
Phil-
Interestingly enough, I have read that many of those in management who are initiating resolutions and trying to move things forward are not doing it (necessarily) because of consumer demand or pressure from activists. There are many stories out there about managers giving credence to these issues (and ultimately becoming their champion) because of their children... and not just because they want the world to be a "better, safer place," but because their children are aware of these issues and passionate about them, talk to their parents about them, are involved in clubs related to them, nag their parents about fuel-efficient cars and the like, and so on. It's an unexpected source of momentum, but when one thinks of the influence children can, and often do, have on their parents, it comes as no surprise.
In addition to this, I also think that as more information has been coming to light about the financial sense that more "responsible" choices make, it trumps management's hesitation on the premise initiating CSR/ESG programs are too costly.
For example: our company did research (published by Institutional Investor in 2005) that compared companies with various track records in regards to the environment. In one of the examples, we looked at two companies facing similar choices around an environmental issue that they were NOT required by law to do anything about. One company proactively chose to spend their dollars amending the situation, and the other chose rather to reinvest the dollars they had into their company. A few years passed, and as regulationas changed, the company which did NOT elect to change their environmental practices incurred high costs in order to bring themselves into compliance. This made them become perceived as having a greater credit risk to lenders, and their cost of capital rose. However, the company which had voluntarily amended it's environmental policies was subsequently perceived as a better credit risk, and its cost of capital went down, and with that, its profits went up.
Thank you for the positive news and your work in this area, and I look forward to hearing more encouraging stories!
Malachi
Posted by: Malachi A Leopold | April 18, 2007 10:13 PM