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King’s Business School’s Dr Gabriela Gutierrez-Huerter O studied one multinational company to find out how faithfully sustainability policies set by head office are followed in its operations around the world
I started my journey as a researcher in 2012 when, according to a 2011 KPMG Survey of Corporate Responsibility, 95% of the largest companies in the world were already providing CSR reports as part of their annual report or through separate reports using guidance from the Global Reporting Initiative.
With the leaders of the world’s most powerful nations due to gather at the United Nations Rio+20 conference, there was excitement about the potential of sustainability reporting to guide businesses towards change. But even in the aftermath of the financial crisis, we continued to see examples of the gap between firms’ behaviour and the information they provided about themselves. Given the serious consequences of misrepresenting social and environmental performance, there was a need to ensure that CSR reporting told us what was really going on behind the closed doors of some of the world’s largest companies.
I set out to explore how confident corporates could be that the CSR reporting standards they set centrally were being followed faithfully in their operations around the globe. Could their stakeholders rely on the information they provided on a given issue? And what happened when standardised global practices came into conflict with different local expectations and CSR reporting requirements?
The HQ vision was to use CSR reporting to address investors and risk, but local implementation was not always aligned with these goals
I had the privilege of being invited inside a UK-headquartered multinational enterprise that had operated a central CSR policy since 2008 to find out how its practices and reporting were “translated” in its overseas subsidiaries. I was granted access to a rich range of internal and external materials, including the company’s own manuals for reporting, and was able to conduct extensive interviews with staff in the central CSR team as well as those responsible for implementing CSR policies and collating and reporting their country’s CSR information in five different subsidiaries around the world.
My first observation was that these local staff approached their task from very different perspectives and different levels of understanding. They were not nominated by the central CSR team, came from different functions and departments within the organisation, and many of them carried out these activities on a voluntary basis. One thing they all had in common, though, was an eagerness to tell me about their experiences, and in particular about the tensions they faced with the company headquarters.
Through these interviews, I was able to track how CSR reporting was modified in purpose and practice, as well as in meaning and language. The HQ vision was to use CSR reporting to address investors, minimise risk and make the company more competitive, but local implementation was not always aligned with these goals.
In some subsidiaries, colleagues resisted the central CSR team’s plans because it had asked for things they felt did not resonate with their national practices and values. Some employees likened CSR reporting to ‘‘a mechanistic task often reduced to ﬁll[ing] in a spreadsheet’’, and did not think it was a valuable addition to their already busy jobs.
In other countries, the central team’s goal of using the CSR report to enhance the company’s reputation was problematic, clashing with a cultural tradition that corporates should be discreet about their socially or environmentally positive activity, and that this discretion was in itself proof of sincerity.
Sometimes the translation process resulted in significant differences on the ground. For example, the HQ policy was that only one CSR report would be produced: the global one. However, when it acquired a Brazilian subsidiary, this policy was challenged. The new subsidiary had previously published its own CSR report, and had invested a lot of resources into developing its own processes, and in engaging with local stakeholders. It had received multiple awards recognising the quality of its CSR report, and did not want to stop. Eventually, a compromise was reached; the subsidiary stopped publishing a national CSR report, but was allowed to retain its code of ethics and present selected information on its website.
My examples also show that the challenges of 'translating' CSR policy threw up some unexpected opportunities
With so much local variation in execution, the CSR team faced a significant challenge in ensuring that the information and policy it provided fulfilled the principles of accuracy and reliability. However, my examples also show that the challenges of “translating” CSR policy threw up some unexpected opportunities. Discovering differences in how a policy is read and interpreted isn’t always a bad sign.
In my study, the “translator” in a Danish subsidiary saw CSR as a chance to engage with the Danish government’s climate-change agenda and adapted the data-collection processes required by the central team in order for the company to have a voice in a national political debate on the subject.
US counterparts, meanwhile, used the CSR process to sooth the relationship with some consumer groups that were considered hostile and had been left out of the centralised stakeholder engagement plan. In short, the “translation” of CSR reporting opened the door to valuable new ideas and insight.
What can multinational firms do to address the challenges and opportunities that the multinational translation process creates? I suggest five avenues for CSR teams to explore:
Support “translators” Organisations that delegate CSR activities and information-gathering to local markets should ensure that they help local “translators” in their efforts. Different people will be on different learning curves, so it will help to give them all access to the same knowledge and understanding at key points.
Socialisation around CSR reporting Annual conferences and temporary assignments could help create a global community and support networks for individuals involved in CSR.
Be transparent Central CSR teams need to be explicit about which aspects of the policy and model are mandatory, and which are optional and could potentially be modified. They should remind the network of local CSR translators of these expectations on a regular basis.
Keep track Monitoring, ongoing communications, and potential HQ intervention at key stages can make the process more efficient and avoid last-minute renegotiation, which can be damaging to internal relationships.
Be flexible Central CSR teams should see the process of translation as a chance to learn. While they may not encourage transformations that undermine the consistency of their policy, giving some scope for flexibility may result in valuable innovation that could be captured and adapted elsewhere.
In the years since I started my research, firms have certainly taken on the mantra of “what gets measured gets managed”, driven in part by reputational concerns. They have made great strides in identifying the issues that are material to their specific business, in working with the right stakeholders and in communicating with the public about their CSR progress. But societal and investor expectations of companies have also heightened, and with ESG investing growing, there has never been more of an incentive for CSR leaders to look inwards at their team’s own practices and culture. The prize will be greater confidence that global CSR policies both reflect the truth and act as a spur to continuous improvement.
Dr Gabriela Gutierrez-Huerter O is lecturer in international management at King’s Business School.