Corporate Eye

The Eurozone, Cricket, and CSR

Sometimes you wonder just how committed people engaged in CSR are about changing business and society for the better.  For example, when seriously challenging stories surface about business and governance the news agenda seems to have a blind spot about their effect on the CSR agenda.  Instead the focus is on money alone, not finance or any other broader considerations.

As two examples, I hold up the the “spot fixing” convictions in cricket and Greece’s abortive referendum on the latest Euro bailout deal.  Both of these should cause CSR businessmen and proponents to think very carefully about what they believe in, and here’s why.

The lesser spotted share price movement

Spot fixing is not about changing the result of a game.  Rather it’s all about betting on the trivialities of a game which will have no effect on the outcome.

Cricketing examples include whether a no-ball will be bowled in a specific over, how many fielding players come onto the pitch wearing sunglasses, and which sunhat the captain is wearing at the toss.

Three international cricketers (Salman Butt, Mohammed Asif and Mohammad Amir) were corrupted by outside agencies—this is now a fact.  The question is whether this has any ramifications for business as a whole.  I’d say it has a huge impact, because these cricketers have done little more than would be expected from any corporate employee.

In other words, if you’ve been paid (sponsored) to wear a certain sunhat or to give a pair of sunglasses prominent placement … well then, surely, you should honour that obligation?  Or maybe not, because someone has paid you more money than the original sponsor.  In other words, they’ve corrupted you.

There is a very fine line between this and how stock markets behave (which, after all, as much about gambling as anything else).  What you’re paid to do or say and by whom ends up being an ethical issue, not a business one.

Which is why tiny little fluctuations in share prices can net investors huge amounts, just as a no-ball on the third bowl of the 69th over of the day can net a gambler a huge amount.

In the age of CSR, if a company really is responsible it needs to ensure its shares are not used in such a way as to create these massive profits for investors.  Little wiggles in the price can come from whispers from the senior management which are just as damaging as a cricketer musing upon the chances of a no-ball in the 69th over.

How can we square this?  There are regulatory parameters defining a “quiet period” and any form of insider dealing is outlawed full-stop.  Yet I think you’d be very naive if you didn’t accept that at least some listed companies whispered more to increase their market value and less to provide genuine, reliable information.

Regulation is, quite rightly, the foundation upon which all businesses are built.  However CSR is all about going beyond regulation and adopting more stringent rules than the lowest common denominator.  But is there any company which goes beyond the regulatory requirements and imposes responsible “whispering” guidelines upon their senior management?  I’d be interested to find out.

Greece and the Eurozone

(hides head under a pillow) When I first started writing this article the Greek Prime Minister had just shocked the EU by announcing a referendum on his country’s bailout agreed between institutional investors and the EU.  And I was outraged at the opprobrium heaped upon him for daring to actually be democratic about it.

Since then the news agenda has moved fast.  Now there will be no referendum and we expect Mr Papandreou to stand down as Prime Minister of Greece.  By the time you read this he will probably have gone but the needs of the financial sector will have been met.

Just as the cricket spot fixing row is all about the legitimacy of information and how it’s used to make money, so this row is all about stakeholder engagement.  In particular, how you engage stakeholders when it is against your best interests.

One of the things the stakeholder agenda persistently runs into is the simple fact that business, like politics and any other form of corporate activity, is essentially structured to give an individual or group power over the majority.  Historians term such a power structure as “despotism” and sub divide it between an “autocracy”, where an individual has power over the majority, and an “oligarchy”, where a group wields the power.

It’s not a perfect fit to match today’s business leaders to yesterday’s despots, autocrats and oligarchies.  But when you consider the issue of power and in whose hands it really lies, the parallel is at least uncomfortable.

For example, imagine a company with a loss-making arm to its business.  Times are tough and it cannot afford to support this arm, so it decides a massive redundancy programme is in order to reduce costs by, say, 40 percent.  However the loss-making arm’s manager has a different view and he reckons the business could survive if it were cut loose and allowed to continue as an independent organisation.  To that end he proposes a poll of the staff affected to see how many would be interested in a management buyout.

Where does power lie?  How can the company practice genuine stakeholder engagement which goes beyond consultation and demonstrably guides corporate policy?  It’s a difficult nut to crack.

This isn’t a direct comparison to the Greek situation but it makes the point well: should stakeholders have a determining say in the broad strategy employed, even if that goes against directors’ best interests?  The answer, under CSR, has to be yes .. because otherwise all stakeholder engagement becomes nothing more than window dressing.

What is responsibility?

A CSR business needs to think long and hard about the broad issues raised by these two issues.  Business is no longer simply a commercial proposition: deregulated markets have turned it into an environmental and social proposition. This means there are huge challenges out there waiting for a CSR business to tackle.

The question is who will tackle these first?  Who will understand that financial gain can be corrupting, or that the currently accepted despotic power structures undermine any form of stakeholder engagement?

So many commentators and leaders in CSR have said that it’s a journey, not a destination.  This is the next stage of the journey.  Who, I wonder, will be brave enough to lead it?

Picture Credit: Cricket Revolution – Screenshot 2 by Szilard Mihaly under CC Attribution Share Alike Licence.Enhanced by Zemanta

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A former CTO, Chris has a broad and varied background. He’s been involved with blue chips, consultancies & SMEs across a wide variety of sectors and has worked in Europe, the Middle East and Australia. In 2007 he decided to combine his knowledge of business and IT with his passion for all things sustainable and has been busy writing ever since. However, his greatest ambition remains to brew the perfect cup of coffee.