By Bill Valentino
The concept of corporate social responsibility has gained a great deal of importance in recent years as companies begin to grapple with a whole set of fundamental questions about governance and the role of corporations in the world. Companies are gradually beginning to understand the extent to which public sector involvement and close governmental relations are increasingly driving responsiveness to expectations in the area of CSR.
A case for government engagement in CSR?
In a world that is becoming more complex and interconnected, trends show that governments are for the most part disengaging practically and philosophically from some of their social responsibilities. Governance failures in the private sector in recent years highlighted by corporate scandals made legislation and regulation a more prominent theme prior to the current widespread emergence of CSR.
An ongoing shift in power from the public to the private sector has meant that societies at large are looking to business to help solve social, environmental and economic problems that were once considered solely the province of
government. Seeking to reduce public expectations of their own responsibility, governments are encouraging the view that they cannot manage contemporary social and economic challenges alone.
But no matter how this shift plays out, governments still dominate the interpretation of the meaning of responsibility. It remains a fact of life that politicians, civil servants and bureaucrats are the ones who greatly influence and determine so much of a country’s economic and business environment not to mention the context of the everyday lives of individual citizens.
Governance and compliance have traditionally been where the intersection between business and governments has taken place. But governments have always had a key interest in being uniquely responsible for the provision of public goods as a key to attracting popular support. Because of this, there is a strong argument for government engagement in CSR. Governments are now more than ever interested and engaged in CSR, because basically it provides a vehicle for multi-sectoral responses and collaborations that are capable of solving some of society’s biggest problems. This goal is being moved forward by governments’ desire to institutionalize the private sector’s socially responsible actions, values and reporting. It also reflects governments’ wishes to involve private sector actors in the development of national strategies for sustainable development. It is becoming apparent that the key role of government in CSR is increasingly being defined as building an enabling framework and environment for it.
CSR and the public sector
The concept of corporate social responsibility looks upon private companies as potentially important development agents, framed by a variety of factors, including where they operate, what their products or services are, and how they assess their risks. This is undertaken particularly in partnerships with governments and civil society. This involves voluntary acts of the business sector, which in theory are undertaken outside the control of government regulation. In reality, governments have both identified this concept of CSR and for the most part have become more and more committed to playing an active role in it by systematically encouraging and influencing the voluntary actions by businesses to improve their impact on society
Companies are also very aware of the fact that governments have and retain formidable fiscal and regulatory powers, which when needed, can be effectively used to remind corporations of their significance in wider social and economic agendas. As a defensive posture, companies, in response to increased pressure for stiffer regulations of business and industry look to government relations and public affairs functions in their companies to understand and manage these risks and ameliorate their consequences.
The role for governments in CSR
The intersection of CSR with government relations and public affairs raises the question of what actually is the role for government engagement in CSR?. The case for government engagement reflects a variety of roles that governments may choose to address different aspects of CSR through different actions. In a baseline study undertaken by the World Bank on public sector roles in strengthening CSR, four principal public sector roles were identified as reflecting the overall range of roles that that governments can take in CSR. These are, mandating, facilitating, partnering, and endorsing.
These roles reflect the government as playing a catalytic or supporting role in CSR. The mandating role defines minimum standards for business performance embedded within a legal framework. This is clearly about setting and ensuring compliance with minimum standards in the facilitating role, governments can enable or incentivize companies to engage with the CSR agenda to drive social and environmental improvements. In their role as facilitators, public sector bodies can stimulate the engagement of key actors in the CSR agenda. The idea of “partnership�? is key to the CSR agenda. Strategic partnerships bring the complementary skills and inputs of the public sector, the private sector, and civil society in tackling complex social and environmental problems. In their partnership role, governments may act as participants, conveners, or facilitators. Lastly political support and government endorsement of the concept of CSR is critical for its widespread acceptance and success as a new business mindset and model by helping to promote the business case and by celebrating business achievements.
Government relations – public affairs and CSR
The government relations and public affairs functions in companies have grown considerably in both size and scope of activity. Their major role is to advise top management on how corporate decisions will fare in the social and political environment, setting, and background of the outside world. It also evaluates how such decisions will be accepted by the public and the government.
In initial approaches, the business community expanded government and public affairs activities in an effort to stem the tide of regulation. It soon adopted an “issues oriented approach�? based on issues such as environmental standards, public health, poverty reduction, product liability, consumer protection, labor and human rights, and community engagement on pressing social issues. These issues, which are also closely associated with the CSR agenda, reflect topics that are appearing high on national agendas and play a central role in political planning. The keys to government relations that get results is essentially being “issue focused�? and having the ability to affect government policy by influencing public opinion and public attitudes.
CSR is beginning to reflect business engagement in national policy processes through alignment between CSR strategies at the operating business level and pursuit of overall public policy goals. Here the public policy role of business is carried out via CSR engagement and initiatives that are strategic and reflective of the context in which they are taking place. This sets a clear and transparent framework for private sector engagement in public policy that makes an important contribution to alignment of business practices with sustainable development goals.
Government relations and public affairs revolve around issues of government, typically trying to win favorable treatment or avoid unfavorable consequences.
They are concerned about relations that wield clout in the political economy. This is where lobbying emerges in companies. It is communications-based and about persuasion and negotiation. Lobbyists follow power so in the context of CSR, with increased importance being given to this topic, this is where attention is being redirected to closely monitor public policy developments. Practitioners try to identify the policy-makers and decision takers regarding matters that concern their organizations.
Lobbying depends upon sound advanced intelligence, skillful timing, and understanding the pressure points and driving factors that can influence the development of public policy and government decisions that have an impact on business. This is where the emerging mix of government engagement in CSR is evolving into an important tool in the MBA toolkit for government relations and public affairs practitioners. It has the potential to be a very effective tool in crafting relationships with governments and officials but also as a force influencing public policy and affecting systemic change.
Integrating CSR – governments and the government affairs function
Concerning the nature of CSR and its impact on business-government relations, it is important to understand how to integrate CSR with these relationships via the channel of this ever increasing important function in companies. This especially includes addressing the perceived responsibilities of corporations beyond the things that governments legally require them to do.
What is important, is to recognize that CSR used as a tool by practitioners of government relations or public affairs has tremendous potential for creating value for companies through not only willingness to cooperate with government’s governance agendas but also in undertaking action in areas which governments specifically identify for business participation.
CSR ties in with corporate government relations, lobbying and managing government relationships by encouraging business to share in finding solutions to community, social and environmental problems which are high on government agendas. The partnerships that result from such collaborations represent a diverse set of forms of economic and social governance in which respective public and private resources were brought to bear to broker and manage solutions to a variety pressing issues.
In a wider agenda, integrating CSR into government relations and public affairs stimulates increased societal awareness and expression of the social responsibilities of business to collaborate with governments to include a range of social and environmental issues and questions of social responsibility within mainstream business operations.
Conclusions
In summary, government engagement in CSR not only sets minimum standards for business or encourages and ensures compliance. It sets frameworks for business participation in public policy, sets policy goals and overall strategy frameworks for private sector action while catalyzing voluntary CSR initiatives and defining socioeconomic priorities from which businesses can take a lead. In addition, it helps to coordinate industry and civil society actions creating partnerships to drive CSR.
Against this backdrop, CSR as a tool in the toolkit of the government relations and public affairs functions of a company, links businesses’ CSR activities to public sector expectations. At the same time, while developing the knowledge base that will facilitate political support and official endorsement of CSR, used as a tool, CSR will advance the creation of essential public- private partnerships. These are necessary for systemic changes that will be critical for achieving sustainable development while ensuring conditions for sustainable business.
About the author:
Bill Valentino is Bayer China’s VP for Corporate Social Responsibility and has been working for Bayer in China since 1987. He holds an MBA form Thunderbird, the Gavin School of International Management and a MA in Technology and Communications from Columbia University, New York. Since 2004 he has been Co-Director of the Tsinghua-Bayer Public Health and HIV/AIDS Media Studies Program and is a Senior Lecturer and Research Fellow at the Center for International Communications also at Tsinghua University. In 2007 he joined the International Advisory Board of the Boston College Center for Corporate Citizenship, at the Boston College Carroll School of Management and was named a Senior International Management Fellow and Adjunct Professor at the Center.
He is also Chairman of the European Chamber’s CSR Working Group and a long-standing member of the American Chamber’s CSR Committee in Beijing. He has lectured each year since 2005 on CSR and HIV/AIDS at the Kennedy School of Government at Harvard, and on a regular basis to MBA/ EMBA groups at the Guanghua School of Management at Beijing University, the Tsinghua School of Management and at CEIBS (China European International Business School) in Shanghai.
