There was a time, not all that long ago, when a company's responsibilities stopped at the office door.
Those days are over. As connectivity increases and activists grow more savvy about forcing transparency in the sourcing of goods (think, for instance, of the blood diamonds campaign or the use of cell phones to reveal the origins of food), William Gibson's prophetic remarks on accountability ring more true every day:
"It is becoming unprecedentedly difficult for anyone, anyone at all, to keep a secret. In the age of the leak and the blog, of evidence extraction and link discovery, truths will either out or be outed, later if not sooner. This is something I would bring to the attention of every diplomat, politician and corporate leader: the future, eventually, will find you out. The future... will have its way with you. In the end, you will be seen to have done that which you did."
The practical manifestation of this trend is that everything matters. Where once a company was held accountable for what it did, it is increasingly held accountable for that which it caused to happen. As the consulting outfit SustainAbility puts it in their report The Changing Landscape of Liability, "boundaries of accountability will progressively expand through the value chain and through the whole life-cycle of a product's development, production, use and disposal."
A company's suppliers matter. Those suppliers' subcontractors matter. The labor standards of everyone who had any part in making the product matter. The materials in the product matter. The energy used to make it matters. The manufacturing process itself matters, as does the producer's plan for the disposal of the product when it's over. Indeed, as far a corporate reputations are concerned, accountability is becoming a vast web of entanglements in the actions of others, some of whom the leaders of that corporation might be hard-pressed to name.
This is something new, and powerful. We already have an increasingly effective global NGO movement aimed at forcing whole classes of businesses into compliance with certification systems (think FSC timber, fair trade coffee, etc.). In his excellent book Branded!: How the 'certification revolution' is transforming global capitalism, Michael Conroy notes that a whole array of industries are now coming into compliance with third-party accountability systems that certify whether or not that company's actions meet basic environmental and social standards. It's not just coffee and chocolate anymore, but also mining, banking, apparel, chemicals and so on. If you're in business, you can be sure that someone, somewhere has a certification system with your name on it.
But in this new phase, it is not enough simply to stop being evil. As Marks & Spencer executive Ed Williams said, "consumers increasingly want to be sure that the companies they deal with reflect their values, can be trusted to behave responsibly, are who they say they are and are the kind of organization they like to be associated with." In simpler terms, companies are finding themselves held responsible for the whole backstory of their products.
A product's backstory, you'll remember, is everything that happened to get the object or service to us, everything that will happen behind the scenes while we use it, and everything that will happen after it leaves our lives. The backstory tells us who we’re being when we make a choice.
Good companies are getting better at telling the backstories of the things they make. Other companies -- the ones who can’t figure out how to tell their backstories, or whose backstories are shameful -- are sailing into the storm. Indeed, how companies tell their backstories is the critical business communication challenge of the next decade. We're entering an era of holistic accountability and backstory management.
So far, attempts at creating tools for telling backstories have been mostly unsuccessful.
One reason for this is complexity: the backstories of even simple products often link together a staggering array of people, places and things.
Another difficulty in backstory communication has been the lack of clear targets. Effectively revealing your backstory conveys explicit goals about the kind of company you're trying to be, and it is still difficult to know what the gold standard is for any particular product or service: What does a sustainable shoe look like? How does a responsible masonry supply chain operate?
There are some practices smart companies should definitely avoid. Lying is obviously at the top of the list, but not much farther down the list is trying obscure negatives by emphasizing the positive -- even when this doesn't devolve into outright greenwashing, it risks being seen as such. But neither will vague goals help much.
Vague goals are dangerous because they're clueless. Consumers and investors both want effectiveness, and at a time when cluelessness about sustainability equals liability, to display muddle-headed thinking is to send a message that you are not entirely worthy of their trust.
A well-intentioned example of flawed goal-setting is the site Actics, which means to help individual and institutional members turn values into action, but which assigns no absolute value to the goals towards which the action aims, thus making the whole site rather wishy-washy. For instance, the most popular action on the site is "Have an interest in and concern for ideas, opinions, practices, etc., foreign to one's own; a liberal, undogmatic viewpoint." To say that this leaves some wiggle room for irresponsible behavior would be an understatement.
In contrast, the path to really managing your backstory runs through big visions, hard targets and open admission of shortcomings. Shoe manufacturers should work to envision a boldly responsible shoe, one which not only incorporates their ambitions about the future of footwear, but also encompasses the cutting-edge standards in ethical behavior: a shoe, say, that has a one-planet ecological footprint and meets the highest possible labor standards. That company should share the vision of that shoe with every one of its customers.
And then it take the hardest step of all: admit the degree to which its current shoes fall short of that mark, and explain the steps it's taking to bring its shoes closer to the gold standard. This has three benefits: the first is that achieving the gold standard is a competitive advantage in and of itself, reducing liability and often raising the bottom line in the process. The second is that companies which reveal their shortcomings and an understanding of what those shortcomings matter earn an astronomical amount of market trust. They may even win over ethical consumers who wouldn't normally support the product but want to help the company in its efforts. When all is transparent, nobody can accuse the company of greenwashing. The third is perhaps less tangible, but I believe no less real because of it: the people in that company will be making shoes they can be proud of.
It's hard to do work you can be proud of these days. We live in an ethically compromised global economy, and almost every aspect of our lives is compromised as a result. But by acknowledging the gaps between practice and aspiration, and setting concrete plans for bridging those gaps, we lift a good part of that burden. Our shoes (or laptops or meals) may not be perfect, but we are pushing in a realistic way towards shoes and laptops and meals that will one day meet our ideals, and that, in and of itself, is something to take pride in.
I've said before that in these times optimism is a political act. Intelligent thinking about backstory management shows us something more: when doing business during a global crisis, idealism can be a practical act.
(image: Background Stories Project)
Excellent post about the necessity of transparency, trust, and honesty. Personally, being the founder of Actics, I find it a pity you extrapolate your correct criticism of the mentioned vague statement on Actics to our medium & tool as whole. Mind you that we've just launched, and the mentioned statement is only at the top due to being one of the first input in the system, whereas the excellent tangible statements on the service by organisations, like our featured member (http://www.actics.com/the_green_insurance_company) has not been on it long enough to crawl up in the ranking.
With a closer look you’d actually find that Actics is indeed a tool for exactly what you’re looking for:
1. Organisations make it transparent what they are doing to be socially responsible
2. They demonstrate tremendous courage in opening up for being measured publicly by their stakeholders & the public on how well they in reality are living up to their intentions
3. They show trust in their stakeholders to give constructive feedback, allowing the organization to improve!
What you cannot see from the outside, Actics is multi-stakeholder tool for ethical improvement, not just an ethical profile. In your dashboard, you can group your invitations for feedback and hence, the tool becomes your navigation & management system on what, where and with whom improvement is called for.
E.g. with accountability in the supply chain that you take up in the article, the tool can be used to monitor 24/7 unlimited number of suppliers dynamically if you demand them to establish their profile in the system. In your dashboard feeds of their performance as perceived by their stakeholders are displayed for you to investigate swiftly if a change occurs in the stakeholder perception to a given supplier. A courageous company would certainly build trust to their stakeholders if they made their supplier display public.
I think you’ve got a strong point in regards to pointing out that it is difficult to establish the ‘gold standard’ of sustainability. This is where I think that all static & universal certification standards fail. The way we’re suggestion with our system is to introduce an objective measurement of subjective perception, i.e. Actics focuses solely on how well the company manages stakeholder value – whatever it might be. Thus, the gold standard should be how well you deliver on what matters to you and your stakeholders, and not a universal criteria of what is right or wrong. Please read the academic foundation for in our white paper that you can download here: http://www.actics.com/info/philosophy
Nicolai, thanks for taking the time to comment.
The challenge is the sentiment expressed here:
"Thus, the gold standard should be how well you deliver on what matters to you and your stakeholders, and not a universal criteria of what is right or wrong."
The problem with this is that there are universal criteria of what's right and wrong -- at least in ballpark terms. We know that we need, for instance, one-planet environmental performance, support of labor standards and human rights, non-corrupt practices, etc. While the application of the standards to the context of particular businesses may be unique in every case, the standards themselves don't much change.
Having "what matters to you" be the standard seems a wide-open invitation for irresponsibility couched in terms of moral relativity.
Nor, to be honest, does what I've seen so far on Actics constitute transparency. Transparency is based on what others are able to see, not on what you choose to show them. The initial cases I've seen on your site are all chosen examples, not revelations of operational practice.
Alex, great response.
Well, transparency in systems like Actics arise not so much from what you initially state as your ethical actions but in opening up for a many-to-many feedback/scrutiny from all your stakeholders. Nothing stops e.g. an employee of a particular company to share anonymously what the real situation is. With these systems it will be impossible over time to uphold an image of you which is not true.
Luckily, I believe there’s a meta trend towards an proactive approach by companies to embrace real transparency because of its benefits in innovation, talent attraction, and stakeholder loyalty, including clients/customers. In this case, tools like Actics will help these companies to get structured feedback from a complex stakeholder picture.
Probably where we stand in loggerhead is in regards to universal standards. As you know, it is pretty easy to demonstrate with an ethical dilemma that universal standards can be unethical. They are not universal from an ethical point of view – you can maybe hope to make it universal through regulation & power but is that what we want? A better term would be ‘best practise’ that we want share & apply globally. As best practise is the accumulation of experience with what works, it opens up for dialogue. That dialogue I believe would be stronger and better with the involvement of people, rather than only let the industry compromise on what the minimum standard should be ‘universally’ in order to prevent the free-rider problem. Actics is a best practise sharing medium, and – for me – it will be interesting to learn what best practises will emerge over time when it happens from the bottom-up, rather than from the top-down.
Let's not sidetrack your main point in the article that it requires big visions, hard targets and open admission of shortcomings. That I endorse fully, and I hope Actics can contribute to that.
The executives at your site's sponsors (Sun Microsystems, Google) and M$, Ill-Begotten Monstrosities and many others should read your piece.
We're watching, and we're all stake-holders, and torch-holders, and pitch-fork holders. Merely trying to stone-wall will not work anymore. Too many people have noticed, too many remember, and too many will refuse to buy or work with you.
But repentance and forgiveness are available to all. "Tools for telling back-stories" tend to be attempts to avoid admitting errors and ethical failings. You've got to come clean. Don't say "mistakes happened". Say, "I did This thing. It was wrong. I should not have. I'm sorry. I'm paying full restitution and penalties to those harmed and won't do that ever again. I've set this up to avoid such errors in the future."
This disagreement doesn't seem to have much substance. We will indeed see if Activa works the way it intends, but the idea is a great start to setting such a gold standard, and should be supported. And the standards are indeed important, the whole thing's an empty shell without them.
The term standard seems to be causing difficulty - drop it from this conversation. One Planet production (as an example) is a goal as much as anything. It's about a destination, and iterative attempts to get closer to it. So there Alex is right, we can't do without these goals, and yes they are universal. But the *means*, which is what Nicolai is talking about, are as varied as the brains that come up with them. Best Practices are techniques for achieving goals.
If Activa becomes a site for corporate sustainability best practices, it will have achieved something profound, but without definitions of what sustainability is - goals - you have nothing.
You're talking about two components of the same solution. You can't do it without both.