Using the Right Terms

How to talk to your boss, and others, about corporate responsibility.

By John Paluszek

Many corporate responsibility officers and their colleagues in top management have been talking past each other, unnecessarily. With a little bit of “translation” the business case for corporate responsibility—that it’s smart business and often good for society—becomes undeniable.
The first step in this dialogue has already been taken. It’s the morphing of the long-held icon, “corporate social responsibility” into corporate responsibility. That development, in itself, has helped many private-sector corporate responsibility officers make progress with both the chief financial officers and chief executive officers who have been uncomfortable with the implications of a “social corporation.”

Finding this common ground, or common terminology in this case, is much more than a semantic exercise.

For one thing, “corporate responsibility” opens up a natural bridge with corporate governance. Hallmarks of corporate responsibility—including transparency and accountability—are now central to every corporation attempting to build, or re-build, trust in the wake of the financial scandals of this decade.

But even beyond that crucial mission, there is a fiduciary aspect to the application of corporate responsibility, both to shareholders as well as other stakeholders. In order to meet its legal, moral and ethical obligation to its owners, the corporation must now anticipate and respond to a changing world that demands a new business model.

Charles Elson, Professor of Corporate Governance at the University of Delaware’s College of Business and Economics put it well when he said: “I believe in shareholder primacy. On the other hand, I firmly believe that unless you are honest and take care of other stakeholders in business—your employees, your customers, your suppliers, your community—you will never create the profitability for your shareholders that you are required to under the law of fiduciary responsibility.”

How we talk about corporate responsibility can be crucial. As playwright Tom Stoppard says, “Words are sacred… If you get the right ones in the right order, you can nudge the world a little…”

Luckily, it’s no longer difficult to link corporate responsibility practices and terminology with business priorities. Here's a short primer.

Of course, using the right terminology is just a way of ensuring that corporate responsibility officers and management are communicating about the issues. There are currently many large-scale issues that are of import to both, such as, the growing dissatisfaction among business institutions with “short-termism” (the reliance on short-term results). The array of business leaders who are leading the charge against this practice includes The Business Roundtable, The Conference Board, The Harvard Business Review and the United Nations Global Compact.

One of the more articulate voices on the issue, and a supporter of “long-termism” and corporate responsibility, especially in governance, is John C. Bogle, founder and former CEO of the Vanguard mutual fund group. In his book, “The Battle for the Soul of Capitalism,” he writes:
“Of course, the successful enterprises that endure must generate profits for their owners. They will do that best when they take into account not only the interests of their stockholders but the interests of their customers, their employees and their communities and the interests of our society.

These are not new ideals for capitalism … hear Adam Smith: ‘He is certainly not a good citizen who does not wish to promote, by every means of his power, the welfare of the whole society of his fellow citizens.’”

I wish I had said that. But you can—whenever you talk about corporate responsibility.

John Paluszek (John.Paluszek@ketchum.com) is Senior Counsel, Corporate Responsibility at Ketchum in New York.