Responsible Business and Reputational Risk
David Varney,
Chairman,
mmO2 and Business in the Community
The institutional importance of business has risen dramatically over the past few years. Today, it is corporations that define a nation's standing among its peers. Corporate logos, brands, international credibility, global competitiveness - all these affect the well being of a nation's citizens. The corporate sector has become the dominant institution in global society.
With dominance comes increased vulnerability. Corporate behaviour is scrutinised as never before. Businesses are too often seen as part of the problem, when we should be part of the solution.
But the dominance of the corporate sector in world affairs is only one of three factors that have come together with powerful effect in the past year.
The second is the erosion of public trust in business, fuelled by insider deals, misconduct and scandals.
The third is the dynamics of a networked society - what may be isolated incidents of abuse or oversight are much harder to contain, ricocheting around the globe in seconds.
These three factors - the centrality of business, the erosion of public trust, and the dynamics of a networked society - have created a veritable 'Perfect Storm' for business. And creating what is effectively the eye of this perfect storm is a new consideration: reputational risk. Reputational risk - the risk of failing to manage your reputation consistent with the goals and values of your enterprise - has found its way into many corporate boardrooms and executive offices.
Loss of reputation is the greatest threat to any organisation. Enron, Tyco, WorldCom, Adelphia, Vivendi in France, and Marconi and Equitable Life in Britain - all these demonstrate how quickly - and how devastatingly - things can go wrong.
For the members of Business in the Community and our partner organisations, this Perfect Storm is not a welcome sight. In some ways, it has made our job much harder over the past year. But I believe it has also done us a great deal of good.
Reputational risk brings our role into sharper focus. It clarifies the need for businesses to look beyond their narrow, commercial goals and incorporate a broader societal perspective. This awareness informs our choices, alters our policies, and mitigates against abuse. It goes deep into the corporate bloodstream.
Business in the Community was founded on the premise that commercial enterprises are inescapably linked not just to their employees and shareholders, but to their broader communities. Our aim is to inspire, challenge, engage and support businesses to improve their positive impact on society. Today, we have grown far beyond the concept of our founders in the aftermath of inner-city riots in the Britain of the 1980s.
Now, our member companies employ nearly 16 million people in over 200 countries. In the UK alone they employ over one in five of the private sector workforce. We work throughout the European Community, in partnership with CSR Europe and worldwide with the Prince of Wales's International Business Leaders Forum. We have close links with Business for Social Responsibility in the United States: Bill Boler, Vice President of BSR, has just been seconded to Business in the Community on a project funded by our Deputy Prime Minister, to show how British businesses can benefit from deprived communities and help revitalise them.
Under my chairmanship, Business in the Community will not only expand its membership, but we will ask more of our members. We are radically altering the requirments of membership. Companies are asked to make a commitment to action. Passive membership will no longer be acceptable.
We are moving from enlarging the membership of the organisation to enlarging the meaning of membership.
We have developed five key principles that inform all our actions. We call them the Five I's. They are as follows:
Integrity. Inspiration. Integration. Innovation. Impact.
- Integrity is the bedrock foundation of our operations. It underlies everything we do, and everything we expect from our members. Without it nothing else is possible.
- Inspiration propels the organisation forward, from individual to individual. We inspire business leaders to inspire action in others. It is a chain of continuing, renewable commitment and engagement.
- Integration is the means by which the programmes and tools we develop are put to use. We work with businesses to develop practical, meaningful ways to integrate measurement and reporting into their mainstream practices.
- Innovation is the process by which we reinvigorate our creative energies. We remain open ourselves to non-traditional approaches and invite constant examination of our practices.
- And lastly, Impact is the reward. We witness it every day, in the people we meet, in the communities that experience the benefits.
Integrity. Inspiration. Integration. Innovation. Impact.
Over the past two decades, the social responsibility agenda has become a fashionable part of the landscape. Government, the voluntary sector, politicians, suddenly everybody's doing it, or talking about it. We welcome that.
But it is critical that the corporate sector remain in the driver's seat. Even in these stormy times. Especially in these stormy times. We are uniquely qualified because we thrive on innovation, risk-taking, and challenging the conventional.
For members of Business in the Community, its leaders, supporters and businesses worldwide, the Perfect Storm is the Perfect Challenge.
For more information, please contact
Business in the Community
information@bitc.org.uk
Tel: +44 870 600 2482
www.bitc.org.uk
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