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June 15, 2009
Industry Initiatives Help Companies Adapt to Expectations on CSR Issues
    by Robert Kropp

Report by the Ethical Corporation Institute finds examples of success among industry initiatives that address CSR, but others that have yet to meet the expectations of stakeholders.

Increasingly, companies throughout the world are expected to implement corporate social responsibility (CSR) programs that align their business practices with the expectations of stakeholders such as customers, shareowners, and the communities in which companies operate. CSR programs are expected to address not only the economic impacts of business practices, but the social and environmental effects as well.

According to a recent report published by the Ethical Corporation Institute (ECI), "The rise of industry-based initiatives in CSR is one of the major transformations in the landscape of corporate social responsibility." Such initiatives, according to the report, provide for consultations among a variety of stakeholders, allocate responsibilities among key stakeholders, and identify advantages for individual companies within the realm of CSR.

The report, entitled The Guide to Industry Initiatives in CSR, differentiates between initiatives that are no more than a set of general principles, those that involve partnerships, and those that have developed certification systems.

The report identifies the advantages to companies of joining industry initiatives. The advantages include sharing common tools, effective engagement of stakeholders, access to public funding, the development of systems of certification and reporting, and improved management of reputational risk.

ECI describes the successes of several industry initiatives. Fairtrade Labeling Organizations International (FLO), a non-profit organization that sets standards and supports producers, reported that retail sales volume for its producers in 2008 is expected to be $4.2 billion. And the Rainforest Alliance, which works to conserve biodiversity and ensure sustainable livelihoods, announced that that the amount of forest and farmland it certifies continues to grow.

On the other hand, industry initiatives face challenges in their efforts to focus on the expectations of stakeholders. The report notes that such initiatives can lead to self-policing and self-regulation, as well as the use of the forum for lobbying efforts. Furthermore, the report found that industry initiatives have made only limited progress toward transparency.

Pam Muckosy, Head of Research at ECI, said, "Of the 31 initiatives we analyzed, only 10% promote product traceability and only 13% have a product label that helps members to communicate ethics to the end consumer."


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