This summer, the Mattel case hit the news. The corporation making Barbie had to recall 21 million toys from global markets, because they posed health hazards to small kids playing with them. This event highlighted issues of sustainable sourcing and the importance of strictly monitoring your supply chain. What’s more, it showed how environmental and social considerations are key aspects not only for business success, but indeed for market survival. It’s no coincidence that last September Mattel announced the establishment of a brand new corporate responsibility unit, answering directly to Robert A. Eckert, chairman and CEO of the US group. Social responsibility is thus not about corporate philanthropy or window-dressing. To the contrary, it is about sustainable innovation and strengthening the stakeholder network in which a company is embedded. This radical change of perspective, both in strategy and management terms, makes a corporation increasing attentive to the needs of various stakeholders (employees, shareholders, consumers, suppliers, financial partners, public actors, local communities, the environment), so to create and maintain durable relations across time which affect decision-making and business implementation. Nike, for instance, in his 2005-2006 Corporate Responsibility Report – significantly titled “Innovate for a Better World” – defines CSR as a source of business innovation and lists three strategic objectives: to improve its own supply chain, with a holistic and integrated approach; minimize its ecological footprint thanks to product innovation and changes across its network of suppliers; use the power of the brand to deal with problems affecting marginal youth, by encouraging sports activities.
In order to show its good standing in terms of accountability and stakeholder engagement, Nike, which in recent past was repeatedly accused of negligent outsourcing that disregarded working conditions in plants located in developing countries, also published an updated review of its contractor factories, thereby enabling a comparison of what was done about it by the company between 2004, the date of an earlier report, and early 2007. It is thus increasingly apparent that CSR has become integral part of an innovative strategic approach to corporate management, favoring enlarged governance models and wider forms of partnership. In Italy, ENEL has launched the Megacommunity project in order to overcome widespread resistance to new power plant construction. Its aim is to build a pre-emptive social consensus among local stakeholders, so to have the necessary support for start infrastructural projects. Tetra Pak has activated partnerships with its major clients, in order to emphasize the environmental pros of its packaging system, leading to common actions to reduce carbon dioxide emissions. Summing up, CSR is not an additional cost, but a factor in business success, that corporations should do well to internalize and manage strategically, thus rediscovering a basic trait of truly great entrepreneurialism: the ability to mobilize resources and support for supply systems rich in value and values.
by Sergio Pivato,
Full Professor of Corporate Management, Università Bocconi