How do we solve the rhetoric gap in corporate responsibility?

Purpose, Inc., episode 1.15: Alison Taylor, Executive Director, Ethical Systems

“You can look at the corporate responsibility movement over the past decade and it’s a good-news story,” Alison Taylor, executive director of Ethical Systems, told host Michael Young in this episode of Purpose, Inc. “What I don’t think today’s corporations have addressed yet is what we might call the whole-organization approach.”

Ethical Systems is a research collaboration housed at NYU’s Stern School of Business. It helps businesses evaluate their company culture and apply research-based strategies to improve integrity. In a barnstorming Quartz article earlier in 2020, Alison called out two glaring problems with the CSR movement:

1. Companies are clinging to a facade of corporate values and purpose while lobbying governments and regulators to avoid penalties, taxes, and disclosures.
2. Companies have quarantined their social-responsibility efforts within a corporate citizenship department. Instead of spending yet another year gathering data and compiling CSR reports, Alison said, now is the time to address pressing environmental and social questions.

There is good news in the story, of course. Alison pointed to a growing international consensus on what corporate responsibility looks like, such as the UN’s sustainable development goals, the Paris Agreement on Climate Change, and increased investor interest in environmental, social, and governance (ESG) issues. But the gap between rhetoric and action is increasingly visible.

Employee activism on the rise

Who is holding companies responsible for their actions? Employees.

“Employees are more and more concerned about questions of purpose and corporate responsibility,” Alison said, a shift she attributed in part to the Millennial generation. “A big and powerful cohort within the organization is very concerned about questions of environmental and social responsibility and is using their voice and leverage to make their opinions felt.”

Previous generations may have engaged in activism behind the scenes. “You are far more likely than you were before to take your concerns onto social media or directly to the media,” she said. Employees are making public internal information about strategy and decision-making. They are also holding their employers accountable for clients such as ICE or fossil-fuel companies and for their political donations.

Corporate responsibility in 2021 and beyond

Looking ahead, Alison foresees the rise of three movements:

• Increased attention to regulation and political donations, which she links to the political and regulatory dysfunction in the U.S.
• Increased focus on how risk assessment combines with material sustainability issues—particularly in the wake of the pandemic—so companies improve their ability to anticipate and respond to the major systemic challenges of the coming decade, whether that’s climate change or big economic shifts.
• A much sharper focus from investors on labor rights and health benefits (the “S” in ESG).

Alison and Michael followed with a wide-ranging discussion about the urgent challenges that the coming years will present, including the need to balance the social and environmental impacts of companies’ decisions, make sure diversity and inclusion efforts aren’t empty performances, and operate ethically in a post-truth environment, as well as the challenge of how to regulate social-media platforms like Facebook.

Listen to the full conversation here:

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