As a newbie to the topic of social entrepreneurship, I've been particularly interested in our class discussions on the issue of founder intentions and "purer means of motivation" as factors to consider when determining the authenticity, sincerity, or better yet, "goodness" of CSRs.
In "What Matters Most," Hollender writes, "Corporate responsibility issues are not black and white. There is no such thing as a perfectly responsible company." That said, I found it somewhat ironic that Hollender, in one of this week's readings , "A New Kind of Company," thinks "a successful rating system is vital for the social responsibility movement to succeed." Hollender's fear of credibibility loss to CSRs amidst a sea of greenwashed, window-dressing American corporations is understandable. Ever the skeptic, I can't help but question the effectiveness of and difficulties involved in establishing a rating system for social ventures such as the one being pushed by B Lab. In order for a ratings system to exist, there must be, an assumed set of ideal standards. But who gets to decide what CSR "goodness" entails? Who decides what makes the check-list? Although the intent of B Lab's founder Gilbert is to "help consumers separate good companies from good marketing," I forsee all sorts of conflicts of interests that will ultimately emerge and muddy up the good intentions of the organization if the ratings system is not thoroughly thought out.
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I had the same skepticism when I first saw initiatives like this and I agree it can be very difficult to define goodness. However, there are institutions out there trying to do so. And even though they can't be everything to everyone, I was surprised at how all encompassing some of the standards for reporting were.
The one that I put the most faith in is the GRI. I know I've posted this info before, but if you do get a chance to look over their metrics and definitions of social and environmental standards, you may have a little more faith in the quantitative side of the argument.
http://www.globalreporting.org/Home
What will be intersting is to see how much companies take the responsibilities themselves to align their organization with a rating system, possibly using the GRI, and then maybe even adding the next layer of auditing, or will this require government intervention. We saw after the great depression the formation of the GAP and standard accounting practices for all public companies, will a similar system be used if companies are required to include social or environmental data in their annual reports? How can you incent companies to not only attempt to improve their social rating, but also pay for the auditing of this rating result?
Similar to when financial transparency arose 70 years ago, or became even more widespread at the turn of the century with Sarbanes-Oxley, companies knew they would become more attractive to investors if they opened their books and demonstrated their "clean" business practices. At what point will this same transparency in the social sector truly attract more investors?
It will be very intersting to see how quickly a formal system arises and how either business and/or government work together to standarize and require such a system, given the unlimited number of questions that will arise.
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