CSR: A Material Perspective
Welcome back Legacy-Makers! As an extension of our three-pillar discussion on profit, CSRS wanted to generate content on the real-life applications of corporate social responsibility, through both CSR literacy and socially responsible business decisions. We recognize that there has been and still is a large knowledge gap between What CSR Is and How it Can Apply to the Real World. That is why we have teamed up with Schulich's very own, Professor Charles Cho, who has shed some light on the topic and serves to alleviate this gap within the Schulich community.
But first, here's a little bit about Charles…
Charles is a trained CPA who practiced accounting before pursuing his PhD in Business Administration. He then became a dedicated academic, researcher, Professor of Accounting, and the Erivan K. Haub Chair in Business & Sustainability at Schulich. Charles was exposed to the world of environmental accounting through an inspiring research seminar by Professor Den Patten during his PhD program at the University of Central Florida. Over time, Charles and Den became very good friends, and both of them grew very passionate about CSR and eventually co-authored several research studies together. While Charles does not consider himself to be an active environmentalist per se, he has developed a deep interest and expertise in applying accounting to address corporate social responsibility, particularly within the scope of social and environmental reporting. Charles has greatly contributed to this young field and has published over 40 articles, many of which have been presented at various national and international conferences.
Rawan: Has the field of CSR and Sustainability changed over time, and how so?
Charles: The CSR field has substantially grown, particularly in tandem with our growing awareness of societal and environmental issues, the growing complexity of the business environment, and our growing self-awareness of human behaviour. However, the concept in itself is not very new and in fact has been emphasized more in the last 30 years. With its inception, industrialization and business development have become more convoluted, as business executives and decision-makers have had to confront the issue of balancing societal demands, while simultaneously satisfying the profit-seeking goals of its shareholders. It is clear that many inherent expectations will clash at some point, as business interests are very divergent. Often, some may criticize the compatibility between corporations and ethics, particularly given the historical and current business models that promote capitalism. Further, "CSR" and "Sustainability" have gained recognition as buzzwords that public relations and marketing departments have branded into companies in a too often shallow way. However, as these concepts evolve, it becomes increasingly important for us to understand them with the same depth that we apply to financial and monetary terms.
R: What are some of the practical applications of CSR?
C: CSR measures can span as far as relatively simple and trivial transformations, such as an organization implementing environmentally-friendly practices, like 'light-bulb' or 'paperless' policies to achieve cost-savings. It can even encompass a whole host of socio-political changes, such as establishing a code of ethics, increasing the percentage of diversity of executives and board of directors, or even strengthening employee rights. Additionally, it can extend to the relationship an organization forms with its suppliers, such as ensuring they are Fair Trade certified and have auditing quality control. However, more recent applications that are emerging are sustainability reporting and performance ranking and metrics. This is very crucial to recognize, as CSR is no longer limited to philanthropic projects, charity events, and 'environmentally-friendly' labels; it has gradually become an established field of study based on both analytics and abstract concepts and supported by material data and information. At the organizational level, leadership plays a huge role in instilling corporate social responsibility not only into the organization’s culture, but also into operations.
R: What is a social audit? Why is it important?
C: The same way companies subject their financials, manufacturing plants, and/or products to a formal (or less formal) audit, many also volunteer to have a social audit conducted. This ranges from anything to verifying sustainability initiatives and target progress, to auditing charitable donations and diversity quotas/metrics. However, the key word here is voluntary, given that social audits are not mandated for public companies like financial audits. Voluntary disclosure of information may cause some concern regarding the credibility, verifiability and bias of information; historically, a majority of these reports paint an overly and suspiciously optimistic picture, particularly those from the Mining and Oil sectors. The development of social audit practices will allow us to apply established frameworks and metrics to these reports, and will serve to challenge the information provided by the company. While CSR assurance is slowly growing as a form of audit, it is still very limited in scope and use. There are also forms of social auditing, ranging from elaborate legal cases to conducting the audit yourself through shadow or silent reporting.
R: What can be said about the common belief that accounting has nothing to do with sustainability?
C: This has always been a challenge, as most audiences have an iron-clad definition and perception of accounting; that is, number-crunching, data-reconciliation, profit and cost calculation. However, this means that it is all the more necessary to educate students, academics, as well as our friends and family that accounting can encompass a broader scope of environmental and social issues. We need to become more open-minded!
R: Why is sustainability important to incorporate?
C: Overall, this is a topic that cannot be avoided, particularly as current waste mismanagement accelerates the effects of climate change leading to mass species depletion and extinction. With each decision a company makes, there is at least some sort of social and/or environmental impact that may or may not be quantifiable, even in the least predictable sectors like banking. Banks may attempt to contribute meaningfully to sustainability and sustainable initiatives by implementing online banking to encourage paperless procedures. While less apparent, a large part of a bank's social responsibility is ensuring that the ventures and projects that they are financing are honest and positively impactful to the community and land.
How can undergraduate students at Schulich and elsewhere become more CSR aware and involved?
Joining undergraduate clubs and programs like CSRS and even graduate ones like Schulich Net Impact and engaging in student activities, workshops, and competitions.
Attending events and presentations, such as those hosted by the Centre of Excellence in Responsible Business (COERB).
Enrolling in core courses and electives within Schulich and across York University to attend lectures held by experienced professionals, such as BSUS4400 (Sustainability Accounting and Accountability, IBUS4500 (Managing Business in Developing Economies), and ENTR4800 (Social Entrepreneurship).
Completing a double-specialization with your specialization of choice and Responsible Business to extend your knowledge.
Remain informed on current events, particularly those that involve social and environmental issues through social media, news programs, or class discussions.
How can we advocate for widespread CSR awareness and involvement?
Advocating for governmental action on strengthening corporate social disclosure requirements to entice more companies into conducting social audits.
Advocating for embedded social and environmental curriculum within secondary and post-secondary education to sensitize ourselves to these issues from a younger age.
Implementing more elementary and high-school level environmental and social activities, such as tree-planting, garbage-collecting, diversity-educating, and Model United Nations (MUN) debates.
Regulating CSR and environmental literacy through additional courses and certifications within specific specializations and post-secondary programs, such as a sustainability component to completing the CPA requirements.