Draft ISO report about CSR published

Source: ISO, 15 April 2002

The draft report "The Desirability and
Feasibility of ISO Corporate Social Responsibility Standards" is now
available for comments. The draft report was prepared by the "Consumer
Protection in the Global Market" Working Group of COPOLCO, the Consumer
Policy Committee of ISO (the International Organization for
Executive Summary — ISO Consumer Policy Committee Working Group Draft
Report — The Desirability and Feasibility of ISO Corporate Social
Responsibility Standards (April 2002)

i. This draft report has been prepared by the "Consumer Protection in the Global Market" Working Group of COPOLCO, the Consumer Policy Committee of ISO (the International Organization for Standardization). ISO Council had requested that ISO COPOLCO consider the viability of International Standards in this subject at its April 30 – May 1, 2001 meeting, and ISO COPOLCO subsequently charged the Working Group with the responsibility of preparing the report. Following a review of comments on the draft report, a final version will be prepared by the Working Group for consideration by ISO COPOLCO at its June, 2002 meeting in Trinidad and Tobago.

ii. The report was developed in light of increasing worldwide consumer and public interest in this issue. In particular, polls show the increasing importance consumers are putting on the social responsibility leadership of companies. The surveys indicate that consumers expect that multinational firms should meet high health and safety, worker, human rights, consumer protection, and environmental standards no matter where their operations may be. Investors and shareholders are also increasingly pressuring firms to demonstrate their corporate responsibility programs and activities. Firms are also increasingly asking that their suppliers show that they have
corporate responsibility programs in place. These market actions are buttressed by laws in several jurisdictions which require that, for example, pension fund managers review the corporate social responsibility practices of companies with which they invest. However, in the absence of credible, verifiable information based on internationally agreed-upon standards, it is difficult for all of these parties to make meaningful assessments and decisions about corporate social responsibility practices.

iii. The report identifies a wide number of existing corporate responsibility (CR) initiatives, from inter-governmental bodies, individual governments, investment-driven entities, recognized standards bodies, and from various other industry, non-governmental, faith-based, and multi-stakeholder organizations. Analysis suggests that the existing initiatives are evidence of a considerable degree of engagement from all sectors of society on corporate responsibility issues, and that considerable progress has been made toward devising workable approaches. However, there is a tremendous
range in quality, content, comprehensiveness and operability among them. As a result, even good efforts to be socially and environmentally responsible may suffer in the confusing sea of variable quality initiatives. Moreover, the wide range and variable quality makes it difficult for firms to know where to turn to for credible assistance in being responsible and being seen to be so, while consumers and other demand-side interests lack credible tools for distinguishing good corporate citizens from their counterparts. This can discourage businesses from engaging in CR activities, and consumers and others from trying to reward good behaviour.

iv. Emerging from the analysis, the report suggests that there are five fundamental elements to effective CR approaches:
(1) identification and selection by a firm of relevant substantive CR norms and principles;
(2) techniques for engaging the full range of stakeholders impacted by a
firm’s activities in firm-level CR development and implementation approaches;
(3) processes and systems to ensure effective operationalization of CR
commitments and objectives, and measurable, verifiable results;
(4) techniques for verification of progress toward CR commitments and
(5) techniques for stakeholder and public reporting and communication.

An effective approach to CR will necessarily involve all five elements, and
will also be flexible and practical so that it is usable by a wide range of
firms operating in widely divergent environments.

v. The position taken in this report is that, based on its work to date and its credibility, ISO as an organization is well positioned to take leadership with respect to one element of effective CR approaches, the development of voluntary ISO Corporate Responsibility Management Systems Standards (CR MSSs). The Working Group concludes that ISO CR MSSs are both desirable (from a consumer and business standpoint) and feasible (from a standards perspective, and a business perspective). ISO CR MSSs would constitute an internationally agreed-upon framework for operationalization of corporate responsibility commitments, with verifiable, measurable outputs. The ISO CR MSSs would build on the intellectual and practical infrastructure of ISO 9000 quality MSSs and ISO 14000 MSSs, and the momentum associated with close to one-half million firms certified as compliant with these standards. As with ISO 9000 and ISO 14001, firms could self-declare compliance with the proposed ISO CR MSSs or could seek certificates from authorized third

vi. It should be emphasized, however, that ISO CR MSSs would be insufficient by themselves to assure that a firm has developed and implemented an effective CR approach. Thus, ISO CR MSSs would be one piece – albeit a fundamental building block – of effective CR approaches.

vii. At this point, it is undoubtedly premature to do anything more than sketch out the bare bones of what the ISO CR MSSs might look like. As a point of departure, the general approach of ISO quality and environmental MSSs will act as a useful template. The BSI-led SIGMA Project, and Standards Institution of Israel draft corporate social responsibility standard offers the best evidence of what a standards-based approach to CR MSSs might look like. Key components are likely to include management requirements or guidance pertaining to:
– compliance with all rules and regulations of the jurisdiction in question and relevant international norms pertaining to environmental, consumer, fair labour standards, human rights, and health and safety protection, as agreed upon through a meaningful stakeholder engagement process;
– development, implementation, and communication of CR and corporate ethics
– policies, including pertaining to anti-bribery and corruption;
– training;
– relations with communities, philanthropy, outreach and involvement;
– measurement and regular reporting to the full range of stakeholders and
the general public.

viii. Because of the increased marketplace credibility associated with ISO International Standards (as opposed to the lesser credibility of alternative ISO instruments), and the need for such credibility if the standards are to be successful in the marketplace, the working group recommends that the ISO
CR management system documents take the form of ISO International Standards.
In this regard, ISO CR MSSs would have the same status as ISO quality and environmental MSSs. ISO CR management systems guidelines could be considered
if it was understood that they were intended to act as interim measures which could be developed more quickly than ISO management systems standards, but that they would be converted to management systems standards with the same status as ISO quality and environmental MSSs at the earliest opportunity.

ix. On the basis of this review, it is also recommended that accompanying the new ISO work item on CR MSSs should be an examination of the appropriate marketing and communications regime for firms complying with the ISO CR MSSs, to ensure that inaccurate representations are not made by firms which would have the effect of misleading consumers, workers, communities, investors, shareholders, governments and other members of the public. It is also strongly recommended that ISO move quickly in this area, to address a clear and pressing need by businesses, consumers, and other stakeholders for agreed-upon international benchmarks, and to reduce marketplace confusion.

x. Corporate responsibility has a special relevance in developing countries, where government infrastructure for the development and implementation of environmental and social regulation, and for the delivery of health, security and education services may be limited. Corporations cannot and should not be expected to assume the role of governments in protecting the public interest. But through their CR practices, corporations can assist in creating communities which are fair and safe for all. The large membership of developing countries in ISO will need to play a key role in devising ISO CR standards which are relevant and practical in their jurisdictions.

xi. In undertaking the development of CR management systems standards, it is clear that ISO is entering a new era in standardization activity, moving away from the technical-oriented standards which were its initial focus of attention, toward "softer," more variable and less precise notions of responsibility. Once ISO CR MSSs are developed, firms will have the option of putting in place quality management, environmental management, and/or corporate responsibility management systems pursuant to ISO specifications. Because of the integrated nature of ISO management systems standards, those firms which are already compliant with ISO 9000 and/or
14001 MSSs will likely have in place much of the architecture and operational culture needed for implementation of ISO CR MSSs. Each firm will need to make its own decision as to the appropriate management systems standards for its activities (ISO 9000, 14001 and/or ISO CR MSS) depending on its distinctive operating environment and competitive context.

xii. For those firms adopting a CR management system compliant with ISO specifications, each firm’s CR approach will be based on the input received from its stakeholders, and the appropriate selection of ISO CR management systems standards, working against a backdrop of domestic and international normative instruments. A firm’s decisions concerning the precise substantive CR obligations it will agree to, and the appropriate verification process it will use (e.g., self-declaration or third party), is
thus a highly tailored and distinctive process, unique to each firm, its stakeholders, and the competitive environment in which it operates. The ISO CR management systems standards are a necessary but not a sufficient condition of success, since an effective CR approach will require that the management system work in conjunction with a range of other stakeholders and instruments.

Dr. Kernaghan Webb
Facilitator, Corporate Social Responsibility and Standards Online Forum.

The Canadian Office of Consumer Affairs is facilitating the operation of
the Corporate Social Responsibility and Standards Forum on behalf of the ISO
COPOLCO Working Group on Consumer Protection in the Global Market.

Download the full draft report (pdf)