Coro’s Blog: On Purpose

CSR as a Poverty Reduction Strategy

Published on January 23, 2013

How powerful is corporate social responsibility? Does it have the power to improve serious social issues? Issues such as poverty that threaten economic success and our ability to live in harmony on this planet? Could CSR be a poverty-reduction strategy?

The short answer is, yes.

How? Well, that’s a longer answer.

In the next several posts I will examine the proactive, concrete role companies can play to address poverty and other serious social issues.

The World Economic Forum (WEF) 2013 Global Risks Report reveals a host of social mega-trends: labour market imbalances, mismanaged urbanization, global governance failure, corruption, food shortages, population aging and chronic disease among others.

But what risk tops all others as the most likely global risk to manifest itself over the next 10 years?

If you said the growing gap between rich and poor – you’re right.

The WEF report calls it “severe income disparity”. The Organization for Economic Co-operation and Development (OECD) 2011 report substantiates the finding with data on the widening gap between the richest and poorest citizens in OECD countries. Inequality was higher in OECD nations in 2011 than at any point in the last 30 years. Even in our democratic, well-resourced country the average income of the top 10 per cent of Canadians in 2008 was 10 times higher than that of the bottom 10 per cent, up from a ratio of eight to one in the early 1990s.

The gap is expected to increase, having unimaginable consequences for social cohesion.

What’s driving this trend and how can business respond? Theories abound. The single most important driver, not surprisingly, has been greater inequality in wages and salaries.

My blog post on excessive CEO pay talks about the growing wage gap between CEOs and workers. It notes that socially responsible companies such as Vancity are implementing living wages. As well, Vancity tracks and reports the ratio of its CEO salary to entry-level employee salary. Its CEO salary was 25 times that of its entry-level worker in 2011. (In Canada in 2010, the average CEO pay was 149 times that of the average Canadian worker!). These measures are important but not enough to address growing inequality.

In this series of posts I will identify tools that companies can employ to make their operations more socially sustainable and positively affect the world around them.

If you are ready to roll up your sleeves now, here are examples of proactive tools.

Recently, with Canadian Business for Social Responsibility (CBSR), I researched and developed a list of 19 Qualities of a Transformational Company. The qualities are designed to be aspirational and inspirational – to act as a roadmap. By embracing these qualities, companies will be prepared to respond to global environmental and social mega-trends – and to contribute to a sustainable world.

For companies that want to make a difference in the social sphere, I have developed a social sustainability framework. And for small- and medium-sized businesses (SMEs), I co-authored with Amy Robinson for Industry Canada an SME social sustainability roadmap.

I realize each of these tools has a number of steps and built-in complexities – after all we are changing the world!

So in the next series of posts, I’ll walk you through the steps of the SME sustainability roadmap to help answer the “How?” And along the way, I will demonstrate how CSR/sustainability can be both a poverty reduction strategy and a social innovation tool.

Stay tuned.

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