‘Purposeful’ social media

Companies have been quick to latch on to social media. Yet most have ploughed their energies into marketing and communications: essentially, old strategies with new technology. The great thing about new technology is that, well, it allows companies to do something new. In social media’s case, that translates to “mass collaboration”. Or, to put it another way, “tapping into the full talent, creativity experience, and passion of all the people it touches”.

The first step is simple, McDonald and Bradley reveal in this illuminating interview: don’t be afraid. Senior executives fret that their customers might revolt or their employees might slip up if they open the social media floodgates. If they’re stupid, yes. But most consumers and employees aren’t.

Step two: play down social media marketing communications (ie Facebook Likes, and their ilk). Why? Because its very popularity can stunt the value of social media overall.

Third step: involve the whole organisation, not just marketing. Cement group Cemex did exactly that with the challenge of carbon emissions and generated a rich stream of reduction ideas as a result.

Collaboration, the article notes, should never be for collaboration’s sake. It needs to be driven by purpose: “good, solid purposes that drive business value”. Remember, people don’t generally care about technology. It’s “purposes” they care about. Social media must tap these. It cannot, however, create them.

“The Amplified Enterprise”, Anthony Bradley & Mark McDonald, MIT Sloan Management Review, November 2011.

High vs low sustainability

Sustainability practitioners are facing the crunch once more, with dismal forecasts for the world economy. If sustainability managers are to defend their budgets, they’ll need to prove their worth. That makes this paper not only insightful but highly relevant too.

Making an empirical case is not always easy. Sustainability works on the long term, yet most traders and investors are caught up in the frenetic, short-termist logic of modern financial markets. To break this, the authors undertake an 18-year longitudinal study of two groups of US companies: “high sustainability” firms (judged by their adoption of voluntary social and environmental standards) and “low sustainability” firms (judged by their non-adoption of such standards).

The researchers’ yardstick of success covers both advances in corporate behaviour patterns as well as accounting and stock price data.

The result? “Significant” differences between the two. Governance standards and corporate culture provide a major differentiator. High sustainability firms are more likely to have board responsibility for sustainability as well as related targets built into executive remuneration. In the same vein, sustainability’s high-flyers are more likely to systematically engage their stakeholders, have longer-term strategic time horizons, count more long-term investors, and give more priority to nonfinancial disclosure.

That’s all well and good. But what about the bottom line? Well, there’s good news here, too. First, the stock price. Put $1 into a value-weighted portfolio of sustainable firms in 1993 and you’d be set to collect $22.60 by the end of 2010. Invest the same in less progressive stocks and you’re looking at a return of $15.40.

There is one sting in the tail; the timeline. Eighteen years is a long time in finance. Most investors think in terms of 18 months, if you’re lucky. It could be 18 weeks, days, hours or even minutes if you’re not. So if you’re hoping to gain a short-term competitive advantage by embedding sustainability, the paper concludes, you’re “unlikely to succeed”. A shame, for sure, but no reason not to slide this paper under your boss’s door.

The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance”, G Serafeim, R Eccles and I Ioannou, Working Paper 12-035, November 2011.

The authors of this paper will be writing an essay on their findings exclusively for Ethical Corporation, to be published in February.

Getting remediation on track

Six years of hard work and the UN has honed business’s responsibilities on human rights into three letters: PRR. No, not the Pennsylvania Railroad. Rather, the much more august principles of protect, respect and remedy.

Each stage sees a role for government alongside companies, a complementary function seen most clearly in the call to remedy the victims of corporate (mis)conduct. But what does this look like in practice?

This fascinating paper looks to answer that question through a detailed study of three major oil spills: those of Shell in Nigeria, Chevron in Ecuador and BP in the Gulf of Mexico.

Set against UN special representative John Ruggie’s guiding principles, all the companies’ remedial strategies fall short. None considers dispute mechanisms other than existing judicial remedies, for instance. Given the adversarial nature of litigation, transparency (on relief procedures and the facts of the spills), is low. Scope is also a problem: recompensing for the past is one thing; providing a safer plan for the future is quite another. Last but not least, an apology to affected communities “would be helpful”. 

“The Corporate Responsibility to Remedy”, Tineke Lambooy et al, University of Oslo Faculty of Law, Working Paper No 2011-35, November 2011.

Campus news

The Seattle-based Bainbridge Graduate Institute is to launch three new certificate programmes on sustainability for executives. The courses bring a sustainability perspective to the built environment, food, agriculture and energy sectors.

Boston College Centre for Corporate Citizenship will be holding its international annual conference on March 25-27 in Phoenix, Arizona.