Corporate responsibility framework: the parts worth your attention

A corporate responsibility framework is not a report, a committee or a set of values. It is a list of obligations, each with a named owner and a piece of evidence, reviewed on a schedule.

Everything below builds that list. The test of whether it is real is at the end and takes one question.

What to take away

Stage one: list the effects

In a room without communications present, list everything your operation does to people who are not your customers or your employees. Traffic, noise, emissions, water, land, what happens to the product at end of life, the labor conditions in your chain, the effect on local wages and rents.

Two rules make this stage useful rather than comfortable.

Name who bears each effect, specifically. "The community" is a way of not naming anyone. "Households on the two streets on the delivery route" is a group you could ask.

Rank by the size of the effect on them, not by the risk to you. Those two orderings are different, and the gap between them is the most informative thing the exercise produces. If your list matches the risk register exactly, you have written a risk register.

Stage two: turn each effect into an obligation

An effect becomes a row when you can state what you owe about it. Most rows take one of four forms.

Stop it. The effect is unacceptable and the obligation is to end it, with a date.

Reduce it to a stated level. The effect is inherent to the operation. The obligation is a trajectory with a number and a date, and it is worth writing down what you are not committing to as well.

Compensate for it. The effect will continue and the obligation runs to the people bearing it. This form is frequently used to avoid the first two, so it needs the most scrutiny.

Tell people about it. The minimum obligation, and the one that applies where you cannot yet do any of the others. It is not nothing: an effect that the people bearing it know about can be argued with.

A row that cannot take any of these forms is not an obligation. It is either a discretionary contribution, which belongs in a different list, or an aspiration, which belongs nowhere. A register built this way can then be run against a corporate responsibility checklist of twelve tests before any claim of credit.

Apply these twelve tests before any claim of credit:

Stage three: assign owners and evidence

Every row gets a person and a piece of evidence, and this is where most registers fail.

The owner is a named individual with authority to change the thing. Where the obvious owner's pay depends on the outcome the obligation constrains, the row goes to someone else or a body with different incentives.

That is not a comment on anyone's character. You created a position where any decision they make will be doubted, including the good ones.

The evidence is a measurement, a document or a dated decision. Three tests separate evidence from reassurance. Could someone outside the company check it? Would it exist if nobody had asked? Does it say what happened rather than what is intended?

The pattern in the middle column is the whole of stage three. Where an obligation constrains a number someone is paid on, the owner of the obligation cannot be the owner of the number.

Stage four: the review that has teeth

Quarterly, one hour, the register on the screen. Four questions per row, and only four.

For each row, ask:

The fourth question determines whether the register exists. A quarter in which no decision was constrained by any row is a quarter in which the register was decorative, and the honest response is to say so in the minutes rather than to note the good progress.

Governance here needs one structural feature to be worth the meeting: a defined set of decisions that must pass through it before approval, with thresholds.

A body that receives reports after decisions are made cannot change them. That is the general point in leadership ethics about where authority has to sit. The same distinction appears in the U.S. Department of Justice Antitrust Division’s Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations. Other named federal reference points include the DOJ Criminal Division’s Evaluation of Corporate Compliance Programs and U.S. Sentencing Guidelines §8B2.1, Effective Compliance and Ethics Program.

What the register is not for

Discretionary giving. Real, worthwhile, and a separate list with a separate purpose. Keeping it separate is what stops a company from answering questions about its effects with an account of its donations, which is the most common way these programs lose credibility.

Public positions on matters unrelated to the operation. A different decision with a different filter. The one useful connection: check the register before saying anything, because a statement contradicted by a row in your own list will be read alongside it.

Legal compliance. The register may include rows that restate legal duties, and where it does, the wording belongs to counsel. But most of what is in it is not required of you, which is the point. Where directors' obligations are in question, they have a specific legal meaning that differs by jurisdiction and corporate form, and the Legal Information Institute's entry on the business judgment rule is a starting point for understanding why "we have a duty to shareholders" is a claim to be examined rather than a conversation-stopper.

Reporting from it

If you publish anything, publish from the register rather than writing to a framework. State the basis of each figure: measured, estimated, modeled, or reported by someone else. Show uncertainty on estimates. Do not change methodology and comparison year in the same document without showing both. Report the rows that went backwards.

That last item builds credibility more than any amount of narrative. Its absence is the fastest way for a reader to work out what kind of document they hold.

What environmental claims can and cannot establish is covered in sustainability ethics. In the United States, environmental marketing claims are addressed by the Federal Trade Commission’s Guides for the Use of Environmental Marketing Claims (the Green Guides), 16 C.F.R. Part 260. They are guidance, not blanket approval for a claim; other social and environmental claims and other markets require counsel before publication.

The one question

Name the last decision that went differently because of this register, and what it cost. Record the actual consequence, whether money spent, compensation, delay, lost output, or an opportunity declined; do not substitute an unsupported dollar estimate.

If the answer is specific, the register is doing its job, and the rest of the machinery can be judged on that. If there is no answer, the preceding stages will not help. The problem is not the design.

The wider argument about what a company is answerable for is in corporate responsibility. The conduct in the chain that most registers understate is in supplier ethics.

Common questions

How long is a usable register?

Shorter than you expect. Ten to twenty rows for most organizations. A register with sixty rows has no owner reading it and is usually a materiality exercise that refused to rank anything.

What if the honest owner for a row is the chief executive?

Then it is theirs, and the review needs someone in the room whose standing does not depend on them. A row owned by the person it constrains, reviewed only by people who report to that person, is a row with no owner.

Do we need a committee at all?

Only if it decides something before the fact. If it receives reports afterwards, you have a reporting line, which is fine, and you should not call it governance.