Ethical Performance
inside intelligence for responsible business


how the dotcom world is lagging behind on CSR

November 2000

Early indications from the UK government-backed Digital Futures inquiry into the ethics of e-businesses suggest that this new business sector is still at an early stage in developing policies on corporate social responsibility

One of the grander claims made on behalf of the ‘dotcom revolution’ is that internet companies are inherently socially responsible. This natural affinity is assumed for a variety of reasons, including their perceived low environmental impact, their progressive policies on flexible working and even the relative youth of many founders of dotcom companies.

Preliminary results from a UK government-backed inquiry into the social and environmental impact of e-commerce are now challenging that view.

The Digital Futures inquiry, which was launched by the UK sustainable development body Forum for the Future at the beginning of this year, will issue a final report on 1 March 2001. It has already established that while there is some enthusiasm for corporate social responsibility (CSR) measures at management level in dotcom companies, there has been little action to turn that enthusiasm into concrete measures.

‘It is clear that we have a tale of two mindsets: a theoretical support for everything that conventional companies may think of in CSR and yet a total practical opt-out,’ says Jonathan Porritt, programme director of Forum for the Future. ‘Theoretical buy in and practical opt-out is not necessarily the best of combinations.’

With more data from the inquiry’s survey of 150 dotcom and information technology companies still to come in, responses from the 78 businesses that have replied so far show the majority of senior managers and chief executives in the companies feel social and environmental issues are ‘important’ or ‘very important’ to their business. Around half also agree that ‘companies with a good environmental and social reputation are likely to benefit from improved financial performance’.

Crucially, however, roughly three-quarters of the companies in question have no systems or policies to measure their own social and environment impacts or those of their suppliers.

The main reasons for this are:

a perceived lack of significant environmental or social impacts

lack of time and money

lack of in-house expertise

In this respect the pressures facing dotcoms in this area are similar to those facing small and medium-sized enterprises, which have also been slow to develop formal social and environmental policies. Many dotcoms are, of course, small companies, despite their high profile. James Wilsdon, co-ordinator of the Digital Futures project, says this should be borne in mind before too much criticism is sent their way.

‘At least the results so far show that there is an open door in terms of these issues,’ he says. ‘In many ways it is not surprising that systems are not in place, given the fact that many internet companies are very new.’

Nonetheless Wilsdon concedes that the findings so far are sobering.

Steve Frazier, managing director of the internet store, accepts that many e-commerce companies, including his own, have done little in the CSR field. ‘This is a very important topic and one which I confess Amazon have not focused on enough,’ he says.

Frazier, whose company is five years old and employs 500 people in the UK, warns that companies in the ‘old’ economy ‘have also set the bar very high’ on CSR. ‘I don’t think that as an industry we can sit back and say that because we are adventurous and new-thinking people, we are going to clear that bar’, he argues.

Katrina Giles, head of social inclusion at AOL UK, one of the few dotcoms to begin to address CSR issues, says the opportunity is still there.

Her own company has begun to help tackle homeless and diversity issues through community investment, but she warns that many others have done nothing, ‘especially on the social exclusion of the digital divide, which they are in a good place to do something about.’

The Digital Futures inquiry, which has received financial support from 14 companies including AOL,, BP Amoco and Unilever will now begin to concentrate on the question of whether dotcom companies may only start to address CSR issues as they mature and grow, or whether they can ‘leapfrog’ straight to more responsible models of business.

But Porritt warns that e-businesses should not fall into the trap of feeling that because they don’t have big reputations to defend in the same way as longer standing companies, they therefore have plenty of time to put things right.

In the US, the environmental impact of dotcom companies is increasingly coming under scrutiny from pressure groups and investors, while elsewhere things are moving almost as fast.

‘The NGOS will be coming after these companies before long, so it would be better for them to take a proactive approach’, Porritt claims.


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