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C
anada's business leaders are in an unprecedented debate on how to fix corporate governance in the wake of the crisis of trust. This is good. But it's not enough. What's missing from Canada's mainstream business agenda is a game plan for corporate social responsibility.

Today's leading-edge practitioners of CSR (as the acronym goes) are neither touchy-feely do-gooders nor "just pretending" for the sake of public relations. They are hard-nosed managers who sound credible when they say. Like Royal Dutch/Shell chairman Sir Philip Watts, who told a Conference Board event in New York this week that "sustainable development -- integrating economic, social and environmental considerations in all our activities -- has become central to how we do business." Shell did not adopt these principles lightly; they came after "bitter experiences" during the mid-1990s: human rights fiascos in Nigeria and environmental protests in the North Sea.

Shell (remember, this is an oil company) supports the Kyoto protocol, which calls on developed countries to cut emissions of greenhouse gases by an average 5.2 per cent from 1990 to 2010. Though its business grew 30 per cent, Shell achieved a 10-per-cent emissions reduction in 2002: double the Kyoto target, years early. This conservation program helped achieve company-wide cost reduction goals of 3 per cent per year.

Linkage to the bottom line is a central theme of today's corporate responsibility: Doing well as a result of doing the right thing. Consider:

How many customers McDonald's may have lost to Wendy's because of mistrust of its product "values" and corporate integrity.

The upside potential for an unrepentant "sustainable" energy company. Says Mr. Watts: "Two billion people live on less than $4 per day. We are in every country in Africa, and my dream is to bring them energy."

The costs to employers of the AIDS epidemic.

The costs to the forest industry of insurance against forest fires resulting from global warming.

The risks that a Canadian company might face from a public campaign against child labor at an overseas supplier.

The value of attracting, motivating, and retaining the best and brightest employees because they are proud -- not just of their employer's generosity -- but of their company's core values, ethics and contributions to the world.

New-breed corporate responsibility is not completely AWOL in Canada. Several of our companies are world leaders in this area. Suncor and Nexen are globally respected, and stuck their necks out during the Kyoto debate. Alcan is a recognized leader too.

But there's little doubt that Canada is lagging in this area. One way to tell is that corporate responsibility as described here is barely on the public radar screen. Newspapers don't cover it and it's not part of the "trust" debate, which focuses on governance. Canadian CSR business forums are modest and few.

Companies that care about such issues make themselves accountable. They set up board committees to drive and audit sustainability strategies. They engage with legitimate external stakeholders to assess needs, gain advice, and start new initiatives.

Increasingly, along with their annual financial reports, they produce sustainability reports. Some are no better than public relations fluff. The best lay out in detail the strengths and weaknesses of the firm's economic, social and environmental performance, along with year-over-year performance metrics. They rate performance against international standards, and use independent external auditors to validate the results.

Here again, Canada lags. According to a 2002 KPMG survey, 19 per cent of Canada's 100 largest public companies produced such reports (of whatever quality). Meanwhile, in Japan (where sustainability reports are mandated by law) the rate was 72 per cent, in the U.K. (where they aren't) it was 49 per cent, and in the U.S. 35 per cent. Canada was 11th of the 19 countries in the survey, ranked lower than all the Scandinavian countries, Germany and France.

What's especially sad about this is that Canada is surrendering its own birthright as a country with a track record and reputation for trust, transparency and integrity. Our business lobby organizations fuss about keeping the border open so we can keep our economy ever more closely tied to the U.S. Meanwhile, European executives, according to an informal survey that Environics International president Doug Miller conducted at Davos, see sustainability and differentiation from the United States brand as sources of competitive advantage in today's tough global economy.

Canada and Canadian business need to rethink and rebrand themselves as forces for global sustainability. Not out of altruism but because you can't have successful companies in a failed world.
David Ticoll is a business adviser, speaker and author.
david@ticoll.com