The researchers set out to determine if mandatory sustainability reporting (CSR) actually causes companies to make socially responsible improvements, or if it's just another PR exercise. Here's what they found:

The researchers show that mandatory sustainability reporting effectively promotes socially responsible managerial practices. Overall, supervision of managers by boards of directors improves, bribery and corruption decreases, and credibility of managers in society increases. In companies where sustainability reporting is a requirement, employee training becomes a higher priority, and corporate boards supervise management more effectively. These positive results are more pronounced in countries that have stronger law enforcement, countries where assurance of sustainability data is more frequent, and countries that are generally more developed.

Researchers Serafeim and Ioannou compared countries that require sustainability reporting with a sample of countries that don't. They then looked at a number of measures of CSR, including "social responsibility of business leaders, sustainable development, employee training, efficiency of corporate boards, ethical practices, and avoidance of bribery and corruption". Next they performed a time-series analysis to try to correct for variance in one country to the next (e.g. the possibility that countries which require CSR reporting are just inherently more conscientious about social issues). Upon analysis, they found that indeed countries requiring CSR reporting improve on the aforementioned categories significantly.

We've long talked about the importance of transparency, honesty, and that advertising must be coherent with reality. It's encouraging to know that when a brand or company publishes a CSR report, it's not just greenwashing, it actually works.

Last week, Jerry Greenfield of Ben & Jerry's was in Ann Arbor at the Ross Net Impact conference to talk about social enterprise and distribute little cups of ice cream to the MBAs in attendance. Jerry discussed starting and growing a business while prioritizing social responsibility, and the difficult experience of selling to Unilever (if you’re unfamiliar, a summary). I think a number of Jerry's points are worth repeating and relevant to DLB as we continue to think about how to grow business at our little design firm. Here’s what Jerry thinks:

Businesses should be responsible to society.
Since business is one of the most powerful forces in society, business should look out for the general welfare of society. Most firms, Jerry reminded us, operate with themselves as the major focus, which is unhealthy and even dangerous to society. In the traditional business sphere, making money is the focus, and doing good is something separate: the prevailing wisdom is that you can't be successful and help society as well. Jerry's belief is that there is value in integrating the two and that business strategies can - and should - be used for good.

Align your mission, metrics for success, and your values.
When Ben and Jerry initially decided to grow their business, they insisted on "growing the business in a reasonable way." This meant that they added value to the company by doing business that was aligned with their values. At one point, they saw a need to redefine the bottom line and how to measure success, so they decided to report not just financials, but to also create a social report to maintain accountability around social and environmental performance (see recent examples here).

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