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by Deborah Smith, EQ Management Executive Summary The
growing demand from various sectors of society for companies to demonstrate their
commitment to being good corporate citizens is gradually finding a response from
businesses large and small within the UK. A carefully selected and embedded external
standard can help to reinforce corporate ethical policies and provide an additional
tool for company reporting on corporate responsibility. The perceived danger,
of giving critics a larger target at which to shoot when things go wrong by publicly
stating adherence to an external and public standard, is being slowly eroded.
The problem with standards
There is no single external standard
that covers in a comprehensive manner all the issues of ethics and corporate responsibility.
Many have a narrow focus on specific and technical areas such as environmental
impact, while other global reporting standards are broader in scope but provide
less guidance in how to implement them and operate at a level where legal support
is very uneven. The business advantages of adopting standards are often
not stated or not compelling. Are external standards really necessary?
Some companies feel they can claim to demonstrate corporate responsibility
without recourse to an external standard. It may be possible if a company's
management knows its stakeholders, makes decision-making clear and open, and communicates
its corporate responsibilities and actions clearly. The ongoing commitment and
cost required for this approach to be successful can be daunting. Companies that
are lucid about the difference between corporate aspirations and reality may see
adherence to an external standard as a cheaper and easier option.
What is the right standard for your company?
The four key steps for
choosing an appropriate standard are:
- Determine how effectively the
company is dealing with corporate responsibility and current ethical issues, and
how it knows its level of effectiveness
- Decide how an external standard
will contribute to business goals
- Consider what the relative merits of
the standards are
- Find out what other companies are doing
The
pros and cons of verification
There are sound arguments in favour of verification.
It can deliver: - Assurance by an independent judge
- Added value/improvement
of process
- Challenge - the quality of, and rationale for, the company's
decision-making
There are also problems such as the adoption of a
compliance-based approach to standards, meaningless language and the trustworthiness
of the verifiers. There are, however, various options a company can choose to
address these problems. Standards for other sectors
Small and
Medium-sized Enterprises are being brought into the debate around choosing standards.
They are often the suppliers of bigger companies who demand of companies in their
supply chain the same standards that they themselves espouse. In addition, there
are signs that government and NGOs - often the critics of business - will come
under closer scrutiny in this respect. Objective standards will also be of value
to them. A standard is not a substitute for a company thinking through and
putting into practice its own business values and ethics framework. This is a
prerequisite of a company demonstrating good corporate governance and expressing
how it wishes to undertake its business. The right external standard, however,
is a valuable tool for a company that wishes to demonstrate its commitment and
practice on ethical and corporate responsibility.
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to Top July 2002 | 
