Ethical Performance
inside intelligence for responsible business


making sense of where climate change fits into CSR

April 2007

Five years ago, at the height of the furore about Enron, some within the SRI community sought to present CSR as the first cousin of corporate governance, then a prime business concern. Corporate governance, so the argument went, concerns itself with the relationship of a company to its shareholders, CSR with the relationship of a company to society.

There is something in this. But not too much should be made of it. Whether the chairman of a company is also its CEO is at most marginal to CSR, for example. A cynic might dismiss the connection as just a convenient way of packaging social and environmental issues for presentation to investors sensitized to governance risks. CSR could be left high and dry when the tide of investor concern about weak corporate governance recedes.

Now another, even bigger tide is rising: climate change. It is tempting to hitch CSR to this supertanker of an issue. Barely a day now passes without a large company stepping forward to demonstrate its responsibilities to society by becoming carbon-neutral, or investing large sums in renewable power.

Let us be clear. Climate change is central to the future prosperity – and survival – of the human race. Its management is of overriding importance. But its sheer scale makes it all the more important not to lose focus. From the corporate perspective, CSR is about risk management, and climate change is but one kind of risk. It will not go away soon, but neither will child labour, human rights violations or money changing hands corruptly. For all the storm about climate change, the four pillars of the United Nations Global Compact still stand: labour standards, human rights, anti-corruption and the environment.

Companies sense that here is an issue that can be managed. Yet they do not control all the levers, and the wider implications of climate change are still unknown, which adds to the risk. Already this year’s hot ‘solutions’, such as carbon offsetting and biofuels, are losing their gloss. There is no quick fix. Managing climate change risk is both part of the CSR agenda and greater than it. Its far-reaching consequences require both local and global responses. Technology can supply some, but not all the answers.

Climate change raises fundamental questions about the social responsibilities of business. It is all very well reducing greenhouse gas emissions per unit of production, but if output continues to grow, total emissions could well increase. The Club of Rome proposed limits to growth as long ago as 1972. If growth itself is irresponsible, where does this leave companies? Or their owners? That is the measure of the climate change challenge.


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