Sibos 2008 in Vienna — 15-19 September 2008

Social awareness

Is corporate social responsibility an obligation or an opportunity?

Bjorn Lomborg, Ph.D. and Adjunct Professor, Copenhagen Consensus Centre

The realm of corporate social responsibility was explored from three different angles at Sibos on Wednesday. The broad challenge of prioritising where money and effort can most fruitfully be applied to do the maximum social good was the subject of a breakfast addressed by Bjorn Lomborg, Adjunct Professor at the Copenhagen Consensus Centre, who challenged participants at a breakfast meeting to prioritise a series of potential solutions to broadly recognised social objectives.

Prioritisation is essential in this regard. As John Bolton, former US ambassador to the United Nations, put it during a similar exercise run by the Consensus centre for diplomats from a range of countries, “If you have a thousand priorities, you have none.” The difficulty with prioritising social objectives, said Lomborg is that in choosing certain issues to address first, one is of necessity relegating others to a lower place in the queue.

One way of looking at social action, he said, is
to focus on solutions rather than problems. With the help of economists, the Consensus Centre has established a monetary measure of the value that a
dollar spent on certain actions produces in terms of benefits.

Lomborg used these measures to introduce the audience to the process of selecting solutions. To address the need to expand the reach of formal education, for example, he asked participants to choose between a reduction in the cost of schooling and payment incentives to parents according to the likely effectiveness of their outcomes, continuing the exercise through a range of issues.

Doing well by doing well?
Is doing the right thing for the world mutually exclusive from making a healthy profit for financial services firms? In Wednesday’s ‘Green trade and ethical investment: The rise in corporate social responsibility’ session, panelists were asked to assess the impact of CSR (corporate social responsibility) and sustainability issues on their business models and the extent to which CSR is a commercially viable strategy.

The definition of CSR was the first stumbling block for speakers, a problem that could have wider implications for identifying where firms need to focus their efforts. CSR can broadly be defined as the demonstrable awareness of any adverse effects that firms have on stakeholders and the need to address them.

Jeremy Charles, COO of Thames River Capital, viewed CSR as another form of corporate governance. “CSR is still just scratching the surface,” he said. “At the moment, it is just a marketing fad that looks good on annual accounts. An investor is still only interested in performance.”

However, Debbie Whitaker, Head of Sustainability for Standard Chartered, said her firm’s sustainability strategy could have a direct effect on the emerging markets in which it operates. “Some of the world’s biggest challenges, such as water availability, climate change, poverty, are the issues that can limit potential economic growth,” she said “It’s about finding a sweet spot between helping address world issues, identifying the challenges that affect the markets and trying to make money.”