business repsonsibility

Tax havens, COVID-19 and sustainability

By Sara Jespersen

At CBS we will host a workshop and two public events (see below for sign up) on corporate tax and inequality next week 24th – 26th June 2020 – the COVID-19 crisis has underlined the pertinence of this topic in major ways.

Taxation, tax havens and corporate tax have been high on the agenda for a while. Since the outbreak of the global financial crisis of 2008 corporations seeking to minimize their tax payments have been under close watch from the media, civil society and politicians with a focus on ensuring that corporations pay their “fair share”. The OECD and the EU have gone to quite some length to try to stop tax-optimizing behavior through revising and modernizing existing rules and legislation. In collaboration with the IMF and the World Bank they have invested time and resources in strengthening tax systems, governance and improving domestic resource mobilization in low- and middle- income countries. This work is ongoing and corporate taxation is already high on the list of priorities for the world community. But then along came COVID-19.

Taxation is central in two ways when we reflect on the pandemic and what will follow. Firstly, governments have passed historic economic recovery packages to ensure that the private sector stays afloat and to avoid mass lay-offs during the lockdown period in 2020. The question is what can we expect in return? Secondly, the emerging discussion on the disruption caused to national economies should be thought into long-term solutions for sustainability including tax.

“Tax haven free” recovery packages

Poland and Denmark, followed by Italy, Belgium and France have attached an explicit conditionality to their COVID-19 state support that companies cannot be registered in tax havens.

In light of this clear conditionality, there has been a media storm in Denmark, when a journalistic investigation revealed that several companies that government support had an ownership structure that was associated with tax havens and with a consumer outcry on social media. This prompted one of the companies, a well-known bakery “Lagkagehuset”, to take out full-page advertisements in daily newspapers to counter the criticism and explain the company structure. The CEO also did a lengthy interview on the issue of the company’s ownership structure to a major daily newspaper.

Two immediate takeaways can be drawn from this:

It has revived the discussion about the usefulness of tax haven blacklists (see more on this by CBS professor Leonard Seabrooke in Danish). Which countries should be on them, and what does it mean if you as a business (or individual) are associated with a tax-haven on such a list? One thing is clear, measures to push countries into greater cooperation will not in itself comprise a substitute for measures to make companies act responsibly.
It has emphasized the importance of corporate governance including a reflected approach to responsible corporate tax practice. The fact that there are so-called tax havens out there warrants companies and individuals to decide how or if they want to be associated with these. If yes, companies must accept that they may be liable to critique and journalistic and even political inquiry into what that association means. It should come as no surprise that association with these jurisdictions may entail suspicion.

Tax havens are not the only concern in relation to companies’ environmental, social and governance (ESG) behavior in this pandemic. The financial times reported how NGOs and investors are challenging shareholder primacy as it leads to growing inequality. Corporate governance and ESG, including tax, is now more than ever one to watch for companies that wish to be part of a sustainable business community in the short-term and the long-term.

Opportunities in the long term

Recovery packages are short-term measures. However, in the long term, the pandemic offers an opportunity that must not be missed in terms of taking a serious look at which direction our global society is heading.

While the pandemic, in theory, cannot tell the difference between the poor and the rich, it is clear that the existing inequality in our society is all made acutely visible during COVID-19. In the US more than 40 million have lost their jobs during the pandemic. In Sierra Leone, there is allegedly just 1 available ventilator in the entire country (for a population of 7 million, where Denmark has more than 1000 ventilators for a population of 5.8 million). As for the gendered impacts even for the better off, there are indications that women are less able to find time to prioritize research and publishing during the crisis than men are (). While big tech companies look to come out of this crisis more profitable and, possibly, powerful than ever.

These are just examples of how inequality is front and center in this crisis and how it offers an important opportunity to consider if the direction we are heading in is where we want to go.

With many countries having been in a complete] lockdown and economic activity at a standstill, this presents a unique opportunity to truly rethink how well the existing economy has worked for our societies and planet. The city of Amsterdam in the Netherlands has seized the opportunity to embrace the concept of the doughnut economy and the OECD is arguing that it makes discussions about challenges of digitalization of the economy and a minimum level of tax for MNEs more pertinent.

Tax is the central tool for governments to raise revenue and engage in redistribution. However, it is much more than a technical tool in an administrative toolbox.

It is the modern social contract for individuals and businesses as highlighted by the discipline of fiscal sociology. Short term, long term, whichever way, you approach it tax should, and will, play a central role in the debate about where we want to go from here towards a more sustainable, and more equal, future.

It provides a key source of revenue to finance vital public services, it can act as an explicit redistributive tool central to fighting inequality, and if used wisely, it can incentivize the behavior of corporations and individuals including the transition to more sustainable practices. Some of these things will be discussed at CBS in June.

A timely workshop on corporate tax and inequality

At CBS we are hosting a timely interdisciplinary workshop as a collaboration between the department for Management, Society and Communication, CBS center for sustainability, and the Inequality platform on corporate tax and inequality. We are bringing together researchers from around the world to meet (virtually) and discuss different pieces of research emerging on this relationship. We have legal analysis, economic modelling, qualitative analysis of tax administration efforts, and sociological analysis of tax professionals and wider societal tendencies on the agenda.

Our keynote speaker Professor Reuven Avi-Yonah will give a (virtual) public lecture (SIGN UP HERE) on Thursday 25^th of June 2020 at 14:15 CET. He will speak to the short, medium and long term revenue options in light of the pandemic including a chance for a Q & A. He is a renowned scholar and has published widely on international tax, history of the corporate form, and CSR and tax among other topics.

The workshop concludes on June 26^th 2020 with a (virtual) practitioner panel to discuss knowledge gaps (SIGN UP HERE) from the perspective of professionals of various disciplines. Bringing together professionals from media, NGOs, tax advisory services, tax administration and business. This is likely to be a lively debate with the aim of furthering the CBS tradition of engaging the private sector on what could be fruitful avenues for further research in this axis of relevance between tax and inequality.

About the author

Sara Jespersen is a PhD Fellow at Copenhagen Business School. Her research is on the emerging relationship between responsible business conduct and corporate tax planning of multinational enterprises. In a complex governance context, there are now signs of corporations’ self-regulation and the emergence of voluntary standards. Sara is interested in what this means for our understanding of corporations as political actors and the notion of political CSR.

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Why consultations on large projects should matter to citizens as well as companies

By Karin Buhmann, Sanne Vammen Larsen and Anna-Sofie Hurup Skjervedal. This article is based on their previously written piece for the Centre for Business and Development Studies.

Insights into the concerns or needs of communities or individuals who may be affected by planned or proposed private or public energy projects or infrastructure projects is important for those who will eventually decide whether the project will be approved to make an informed decision. Such insights can be gained through consultations carried out as part of assessments of the environmental or societal impacts of projects.

This begs the question: what is a good process for stakeholder engagement of local communities and citizens in impact assessment processes? This is a global issue that in recent years has come to be high on the agenda in countries from the Arctic to the Global South.

Consultations as part of impact assessments

Consultations allowing for stakeholder involvement in impact assessments are common in regard to private projects concerning the establishment of mines, windfarms, sun-power farms and dams for hydro-power. The same applies to public infrastructure projects such as airports, roads and ports, which are often necessary for the transport of the products to be gained from private projects.

Societal impacts of projects are typically assessed through social impact assessment (SIA), environmental impact assessment (EIR), or human rights impact assessment (HRIA), or combined approaches such as ESIA or ESHRIA. All aim at identifying and preventing or mitigating adverse impacts and advance positive impacts, of planned projects or extension of existing ones. It is customary and often mandatory for the impact assessment to involve local stakeholders who are or may become affected by the project.

This typically takes place through consultations, which may take a variety of forms to enable public participation in the identification of the impacts of the planned activities. Consultations are organized by authorities or the organization having applied for a permit to engage in the new activity. In addition to environmental impacts, impact assessments often include the project’s effects on a range of broader societal issues, such as health and safety in the local areas, employment, local business and sources of income generation, etc.

The Nordics and many other countries have introduced mandatory consultations of local communities. Some international development banks, e.g. the World Bank, have made certain loans conditional on impact assessments.

Uncertainty about consultations

Despite the great significance of consultations for stakeholder involvement, there is often uncertainty with local communities and other groups of affected stakeholders in regard to what exactly a consultation is, what it entails and what to expect of the process. Moreover, even when consultations have taken place it is not infrequent that affected communities are unhappy with the process or the extent to which authorities take their concerns or needs into account.

For example, Sami groups living in the High North have complained to authorities in Norway and Sweden because they are concerned that windfarms disrupt the grazing areas of their reindeer and, as a consequence, the traditional way of life of the Sami. Authorities and business enterprises can also be unsure about what constitutes the proper process or ‘best practice’ for consultations with affected stakeholder.

Photo: Reindeer at Kvalsund, Norway/ K. Buhmann, 2019

What is a consultation?

Consultations on project activities are carried out to provide an informed foundation for decisions to be made. In providing access to participation in decision-making on activities that will affect one’s life at the everyday level, consultations contribute to a form of very direct democracy and can be argued to be part of the human right to public participation.

Consultations provide citizens with an opportunity to ask questions and express their views on a project. But as is the case for other democratic processes, one does not have a claim to seeing one’s views winning out. This is an important aspect for the appreciation of what to expect of a consultation; how to engage in a consultation process; and the information that authorities, companies and consultants must or should provide when conducting consultations.

It is not infrequent that consultations are conducted by a company involved in the project. A good consultation process marked by sincere dialogue and appreciation of local concerns can build understanding and acceptance of the final design of the project. A process that does not live up to local stakeholders’ expectations of influence can lead to the opposite result.

Accordingly, it is important for involved companies as well as authorities to ensure that stakeholders are given the information necessary to understand and assess how the project may affect them, what their rights are and what they can expect of the consultation process.

Local stakeholders’ expectations and understandings

Our investigations have demonstrated that it is not infrequent for actually or potentially affected stakeholders in a local community to be uncertainty of what a consultation entails or what to expect of the process and result. Others have shown that frustration results when authorities do not seem to take views made during a consultation into consideration in their decisions.

During meetings in northern Scandinavia in June 2019, we met with several inhabitants in Sápmi, who expressed frustration with consultation processes. Sápmi is the cultural region traditionally inhabited by the Sami people, an indigenous people who traditionally live from reindeer herding and fishing. Grazing areas on which the Sami’s reindeer depend are adversely affected by the establishment of windmills and mines.

Sami communities are involved and asked for their views through consultations, but they also see authorities granting permits to put up windfarms and new mines on contravention of the contesting views and concerns presented by the Sami during consultations. Authorities in Norway have granted permission to open a new copper mine in Northern Norway despite the opposing views submitted by the Sami Parliament (Sametinget). The motivation to engage actively in future consultations easily gets reduced, even with those who are aware that a consultation does not equal a claim to one’s views to be granted when central authorities are seen to make decisions affronting local democracy.

Some of our other meetings have shown that when English is a working language or the common ’lingua franca’ in an area that does not have English as its main language, mistranslations may occur and lead to misunderstandings about the process and objectives. For example, the Danish term for consultation, ‘høring’, often gets translated into English as ‘hearing’. This may give unintended associations to the conflict-oriented type of ‘hearing’ that takes place in courtrooms and it’s objective of determinations leading to a winner and a looser, thereby disrupting the understanding of the consultation’s objectives of dialogue and developing workable solutions. Our fieldwork in Greenland and elsewhere offers several examples of this mistranslation.

Consultations and the corporate ’social license to operate’

Consultations can contribute to risks of adverse impacts being identified and addressed before they develop into actual problems because consultations offer opportunities for local stakeholders, including those who are actually or potentially directly affected by the proposed project or project idea to express their concerns.

Because of this consultations not only matter to the longer-term well-being of the local community, but also to relations to the organization that is behind the project giving rise to the consultation.

For example, a consultation concerning a proposed mine matters not only for local stakeholders who are concerned with the mine’s impact on grazing areas or the quality of water, but also for the perception of the company that wants to carry out the project, and for trust in authorities who will be granting the permit or prescribe changes and conditions.

Authorities often delegate the task to conduct a consultation to the company that applies for an exploration or exploitation permit. One the one hand, this may strengthen the consultation process because the company conducting the process knows the project very well and is able to reply to questions of a technical character. On the other hand, participation in the consultation and trust in the process may suffer if local stakeholders, who are worried about contamination or other harmful effects, suspect that the consultation may be influenced by the company’s interests.

‘Fox in the henhouse’

Allowing the company that applies for a permit for the project to conduct the consultation can appear like letting the fox into the hen house.

However, if performed well, the company will obtain a better appreciation of the project’s impacts and will be able to make relevant adaptions. Likewise, authorities often lack both the necessary technical knowledge and other resources to conduct consultations. Companies lack knowledge, for example in regard to local issues are expected to purchase relevant expertise through consultant advice. The company thereby invests in establishing the necessary informed knowledge foundations for the permit to be granted by authorities.

When companies are given the responsibility to conduct consultations that may affect the decisions to be made by authorities, it is important that they carry out a correct and good consultation process that allows local stakeholders to participate at times suitable to them. If a consultation takes place during normal working hours many local stakeholders may decide to stay away because participating would mean a loss of income.

Likewise, participation may be limited if the consultation takes place in a location that requires long transport. Consultations conducted in another language than the local one reduces the opportunity for local stakeholders to engage in a dialogue. Unless technical or health-related issues are explained in a manner that matches the prerequisites of local stakeholders, risks arise that they will not obtain an adequate understanding of the impacts of the project. This will increase risks of misunderstandings and that relevant questions remain unasked, or that relevant concerns are not voiced.

Photo: Sheepfarm in Qassiarsuk, Narsaq area /K. Buhmann 2018

During field workshops in Southern Greenland in August 2018, we were given insights into a diversity of local experience of consultation processes and expectations. The point of departure for our meetings was a proposed mine in Kuannersuit (Kvanefjeld) by the town Narsaq. Greenland’s eight largest towns, Narsaq has a population of around 1,500 and is placed in an area with extensive sheep grazing and tourism based around ruins of the Norse settlers. The mine will produce diverse minerals and rare earth elements, with uranium as a by-product due to high uranium contents at this specific site.

Consultations have been conducted by the company. We met with several sheep-farmers and actors in the emergent tourism sector who expressed concern whether uranium dust from the mine would harm their business, income and human and animal health in the area. Several individuals were frustrated with the process of the consultation, such as meetings taking place at locations or times of the day or year that made it difficult for the sheep farmers to travel to the meetings and take part in them. Moreover, as the Sami noted above, several people in the Narsaq area were basically concerned that the authorities do not seem to take the concerns voiced into account. Several questioned whether the process is accordance with the ideals of a democratic society.

Ups and downs of consultations

When consultations work well they can contribute to a sense of common or including decision-making. Research shows that this underscores the acceptance of the resulting activity, related to what is sometimes referred to as the legitimacy of the activity.

When consultations do not work well they can have the opposite effect and undermine trust, not just in the specific project but also in the company or companies involved. This relates to what is sometimes referred to as the ‘social licence to operate’. The term ’social licence to operate’ relates to the risk of loss, that a company (or companies) run as a result of local protest or opposition to a project for which they have applied for a legal licence.

Even if a company has obtained a legal licence, for example, to undertake the exploration of minerals, local opposition may be present. There are indications that a weak social licence to operate is on the rise in Greenland, thereby affecting the local legitimacy of projects like the Kuannersuit mine in Narsaq (Bowles and MacPhail, 2019).

Greenland is a country based on the rule of law with strong institutions and regulation and traditionally a relatively high level of trust in authorities and their decisions. Observations that in such a society and despite formal requirements, there is lack of trust in consultations and arms-length between authorities and companies conducting the consultations, and that concerns voiced by local stakeholders during consultations are taken seriously and acted upon are severe indications that formal procedures are not sufficient for a good consultation process. Accordingly, it is important to understand what constitutes a good consultation process from the perspective of the individual stakeholder, even if there is still no claim to having one’s way in regard to the final decision.

References

Bowles, P & MacPhail, F (2019) Coming to the Surface: The Social Licence to Mine in Greenland. Paper submitted for international seminar ‘Problems and Perspectives of social responsibility in natural resources exploration, exploitation, and management’, Pskov State University, Pskov (Russia) 23-25 October 2019 (on file with lead author).

About the authors

Karin Buhmann is Professor at Copenhagen Business School, where she is charged with the emergent field of Business and Human Rights. Her research interests include what makes stakeholder engagement meaningful from the perspective of so-called affected stakeholders, such as communities, and the implications for companies and public organisations carrying out impact assessments.

Sanne Vammen Larsen is an expert in the field of environmental planning and impact assessment, with a focus on integration of climate change in Impact Assessment, local processes and social impacts, and dealing with risk and uncertainty. She is employed as an associate professor at The Danish Centre for Environmental Assessment at Aalborg University, Denmark.

Anna-Sofie Skjervedal is PhD from Ilisimatusarfik – the University of Greenland and Aalborg University, and special consultant in public participation within the Municipality of Sermersooq, Nuuk, Greenland. Anna-Sofie specializes in public participation within impact assessment processes in relation to extractive industry development in Greenland with a focus on meaningful youth engagement.

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Better than nothing but still “exSASBerating”!

By Dieter Zinnbauer.

Why a powerful push by the world’s top asset manager towards more sustainability reporting still falls pretty short.

Great news

BlackRock, the world’s largest asset manager promises to leverage its weight and voting power for more consistent and comprehensive corporate reporting on sustainability. And this includes corporate lobbying.

Good news

The Sustainability Accounting Standards Board (SASB) standard that BlackRock backs also includes a reporting dimension on what it calls “Management of the Legal & Regulatory Environment”. According to the SASB this category “addresses a company’s approach to engaging with regulators in cases where conflicting corporate and public interests may have the potential for long-term adverse direct or indirect environmental and social impacts.”

Now, this sounds quite promising.

It really seems to recognize the urgent imperative for business to align corporate political activity with its social and environmental responsibility and to assure all stakeholders in your reporting that this is the case.

Or to take a plain language and not entirely hypothetical example: as a responsible corporate citizen show everyone that you are not a hypocrite and that you do not lobby against improved fuel efficiency standards while at the same time celebrating your green credentials by supporting smart transport initiatives.

As the SASB further elaborates on this reporting dimension, the category addresses among other “a company’s level of reliance upon regulatory policy… actions to influence industry policy (such as through lobbying) … [and ] it may relate to the alignment of management and investor views of regulatory engagement and compliance at large”[1]. And the related accounting metric mandates a “discussion of corporate positions related to government regulations and/or policy proposals that address environmental and social factors affecting the industry.”

One could be a stickler and criticize that this is not comprehensive and specific enough, as it, for example, does not require to disclose how much money is spent on specific lobbying issues or what other of the growing repertoire of corporate influencing and communication strategies beyond lobbying are deployed to shape the public policy debate on these issues.

But let’s be pragmatic, the fact that the world’s largest asset manager has chosen to explicitly demand reporting on lobbying from the many companies it invests in and also threatens openly to vote against boards of companies that do not play along is a great step forward.

But then the really not so good news

The SASB only requires companies to report on corporate political activity in sectors where this category is judged to be material. And quite startlingly corporate political activity is only viewed as material for some segments of the oil & gas sector, biofuels, and chemicals. That’s it.

How can this be? No mention of air freight & logistics, airlines, marine transportation or the car industry – sectors in which many (but not all) companies are out in force to lobby against green taxes and/or higher resource efficiency standards, thus delaying much-needed investments in future-proof technologies and creating a regulatory backlog that all but exacerbates the material risks of stranded assets and failing business models further down the road.

How about construction materials or the steel industry whose future trajectories in energy efficiency or recycling and the rules and regulations that will apply are material to global sustainability and corporate success alike?

How about the meat, poultry and dairy sector? I have not researched their lobbying activities but would imagine that they are very much engaged around evolving rules for methane emissions as one of the most potent climate gasses in a world of growing appetite for meat. No need for investors to know how corporate strategy, public policy engagement and sustainability dynamics line up?

Or how about coal and electricity & power generation? Are these sectors viewed as a lost cause where corporate political action will simply be assumed to be misaligned with societal sustainability goals and thus not worthwhile accounting for? Does this do justice to and incentivize responsible corporate political engagement where it is perhaps more material and needed more than in many other areas?

These are just some examples with regard to climate change. Corporate political engagement is plausibly a material issues for many other sectors as well, for example when thinking about social aspects of sustainability, e.g. how platform economies craft business models and lobby on the rules that apply to gig work, how big tech seeks to shape privacy rules that are closely linked to their advertising-based business models…

Corporate political activity is a highly cross-cutting material issue. Expecting corporate reporting on it is urgent and most welcome. Yet, limiting this push to only five of overall more than seventy business sectors is more than unfortunate. Trailblazing trustees of our savings and investments and the reporting standards that they promote must and can do better.

About the author

Dr. Dieter Zinnbauer is a Marie-Skłodowska-Curie Fellow at CBS’ Department of Management, Society and Communication. His CBS researches focus on business as political actor in the context of big data, populism and “corporate purpose fatigue”.

Twitter: @Dzinnbauer

Essays: https://medium.com/@Dzinnbauer

Working papers: https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=1588618

References:

[1] Annotations as extracted from SASB materiality map https://materiality.sasb.org/

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When business is not as usual – why companies should engage with humanitarian crises

By Verena Girschik and Jasper Hotho

As evidenced in places such as Syria and Yemen, humanitarian crises are becoming ever more complex (OCHA, 2017a). In response, international and humanitarian organizations increasingly call upon the private sector to help alleviate human suffering. As we describe in our recent article (Hotho & Girschik, 2019), many companies have answered this call. In the past, the role of companies in humanitarian crises tended to be limited to financial or in-kind donations. Today, more and more companies seek a direct role in the delivery of humanitarian action, often through collaborative partnerships with humanitarian organizations.

Why invest in business-humanitarian collaboration?

Companies that engage in humanitarian initiatives often do so for philanthropic reasons. However, these companies may fail to appreciate that engagement in humanitarian initiatives can also provide them with longer-term strategic advantages (OCHA 2017b).

To begin with, business-humanitarian collaboration likely has reputational and motivational benefits. Contributions to humanitarian relief efforts send positive signals to external stakeholders, including customers and governments, as well as internal employees.

However, companies may also benefit in more tangible ways.

First, engaging directly in the delivery of humanitarian assistance can provide firms with the opportunity to learn about new countries and markets. For example, MasterCard’s payment solutions for humanitarian crisis situations allow the company to contribute to a good cause while developing a more detailed understanding of under-explored areas that may at a later stage become potential markets.

In addition, humanitarian engagement provides opportunities for relationship building with international organizations, governments, and local communities. Such connections can enhance a firms’ competitiveness as they may unlock or facilitate interesting market opportunities down the line.

Humanitarian crisis contexts also provide companies with opportunities to develop new skills and competencies or strengthen existing ones. For example, by participating in the Logistics Emergency Team—a business alliance providing UN agencies with vital logistical support—companies such as A.P. Møller-Mærsk have the opportunity to push their logistical capabilities while providing life-saving support during complex emergencies.

Business-humanitarian partnerships must address three fundamental challenges

Notwithstanding the potential of business-humanitarian partnerships, the extreme conditions of humanitarian crises renders such collaboration especially complicated and risky. Humanitarian assistance is often delivered to vulnerable populations in politically complex and volatile contexts. As a result, partners face three fundamental challenges that they need to be prepared to address if they are to leverage the potential of their collaboration.

1. Securing ethical engagement

The first challenge is to ensure that private-sector involvement is ethically sound and aligned with the humanitarian principles of humanity, impartiality, neutrality, and independence. Companies and their humanitarian partners need to uphold these principles in spite of commercial interests and practical constraints.

2. Realizing effective engagement

Collaborations between humanitarian organizations and companies are complex to navigate. Partners need to find ways to build mutual understanding and trust and create a favorable climate for mutual problem-solving. In addition, both sides may need to adjust processes and operations in order to align capabilities and enable effective collaboration.

3. Sustaining business-humanitarian partnerships

Companies and their humanitarian partners often struggle to demonstrate measurable benefits from their collaborations. Companies need to sustain internal support for such partnerships even when there is no immediate business case. In addition, humanitarian organizations need to engage companies in the right place at the right time; namely, where humanitarian needs are greatest.

Addressing these three challenges is neither quick nor easy. It is through strong mutual commitments and innovative responses that business-humanitarian partnerships can leverage their potential and deliver humanitarian assistance ethically, effectively, and sustainably.

References:

Hotho, J., & Girschik, V. (2019). Corporate engagement in humanitarian action: Concepts, challenges, and areas for international business research. critical perspectives on international business, 15(2/3), 201-218.

OCHA (2017a). Annual Report 2017

OCHA (2017b). The Business Case: A Study of Private Sector Engagement in Humanitarian Action

About the authors

Verena Girschik is Assistant Professor of CSR, Communication, and Organization at the Department of Management, Society and Communication, Copenhagen Business School. Verena’s research focuses on the responsibilities of companies in the contexts of complex societal problems and humanitarian crises. Interested in relations between companies, governments, NGOs, and other societal actors, her research explores how companies negotiate their roles and responsibilities, how they perform them, and to what consequences. Verena’s Twitter: @verenaCPH)

Jasper Hotho is Associate Professor at the Department of International Economics, Government and Business at Copenhagen Business School, and Senior Editor for the top-tier academic journal Organization Studies. Jasper’s research focuses on the opportunities and challenges that arise from private-sector involvement in the delivery of humanitarian assistance.

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Football and the Meaning(lessness) of Management Concepts

By Esben Rahbek Gjerdrum Pedersen

Romanticized management concepts often seem to fall short in capturing actual management practices in today’s corporate world. Experiences from other types of organisations may help deepen the understanding of the concepts and the phenomena they are trying to portray.

Romanticized concepts

The management literature is full of concepts, which indicate passion, engagement and community. Internally, terms like corporate culture, values, karma, spirituality, passion and even love and religion express a deep symbiosis between the individual and the organization. Externally, corporate communication is soaked in references to sustainability, citizenship, social responsibility, and community engagement.

If we are to believe the “About Us” sections, corporations today are more about benevolence than business.

There is a problem though.

What happens if you compare the rosy picture of business with harsh business realities? One illustrative example is the talk about management commitment. How does it go along with the fact that the average tenure of CEOs is steadily decreasing? And how do you combine talks about commitment with the recurrent discussions about bonus schemes? It seems like an awful waste of money to approve exorbitant compensation packages to CEOs if they were driven solely by an inner sense of duty and dedication to the job.

What all these management concepts have in common is that they try to give business personality, heart, spirit, and soul.

However, if we are interested in concepts like commitment, passion, and loyalty, today’s corporate world is perhaps not always the right place to look. Probably more than ever before, these concepts seem more meaningful in private life and collectives rooted in the local community.

Like community football…

As part of a survey among Danish football clubs (supported by a UEFA research grant), I asked club representatives a simple, open question: – What is the main reason to be engaged in the club? A few quotations are found at the bottom of the text and well illustrate some of the differences between the corporate world and community sport. A few examples:

Stickiness. Commitment means being in it for the long haul. It is not unusual that volunteers are members of football clubs for 20, 30, and 40 years. When managers drift from one company to another, it serves as proof that they are committed to their career. Not the organisation.
Obligation. The quotations from the survey indicate that commitment to community sport is often linked to an obligation to support the local community and paying back for own experiences as active players.
Community. In community sport, commitment has roots. You are committed to something: – the sport, the people, the club, and the community. It is probably no coincidence that local club names usually refer to a city or a region, whereas the corporate names are mostly faceless abstractions referring neither to activity nor geography.

The real motives

The point is not that club volunteers are all saints dedicated to the greater good of society. Most volunteers probably start off with instrumental motives when they become engaged in club life; either because they play themselves and/or have children in the club. However, for some volunteers club life gradually becomes part of one’s identity and network.

The question remains, however, why the management literature seems so eager to wrap business in romantic rhetoric about commitment, loyalty, authenticity etc. when these concepts often seem to reflect what has been lost rather than what can be found in today’s corporate world. Of course, part of the management vocabulary can be passed off as organizational bullshit, but even the disregard of truth may reveal some truths about our society.

Maybe the abundance of romantic management concepts reflects a dream about relationships in a market characterized by transactions.

A seek for passion in a highly professionalized work life. Longing for a community when people have all become individuals. Whatever the reason, a researcher should restrict the use of concepts to organisations where they have not yet become emptied of meaning.

Like community football…

Table 1: Respondents about the main reasons for being active members of the football club (Translation from Danish)

– ”Make a difference in my local community and support my interest in grassroot football. Jeg am a club person and believe voluntary work should be a ”citizen duty” (…)”
– ”After a whole life as active in the club, also as trainer and board member, it was natural to continue (…) and give something back. I think it is fun to work with kids and people, who also give me a lot I can use in the work life”.
– ”I like the social life in the club and want to help others in getting the same experience”.
– ”I have played football from when I was a kid and had wonderful experiences that I like to hand over to the youth”
– ”Because I love football and like to give something back for all the years when I was more on the field than outside. Moreover, it is important that somebody do something in the associations in our community”.
– ”Because my kids play in the club and because I think you should make an effort in the associations in the city. And not least because I like to be part of making a difference in the local associations.
– ”Have been an active football player all my youth, where I met engaged trainers and leaders. So it is probably to give something back”
– ”Help our city in having a place where children, young and elderly can play football under good conditions”
– ”Funny, I have asked myself the same question:-) I have been an active player from when I was 8-9 years old, to league player, to old boys – so it is simply paid back time for all the experiences (…) to all the people who made it possible.”
– ”Always been involved in football. Somebody helped me when I was playing myself. Think that you have to give something back.”
– ”Payback to the club which has given me a lot of good experiences. My contribution to Danish associations – the voluntary brigade!”
– ”Lifestyle after more than 30 years of voluntary work. Help young athletes to get a good future. This has been my goal throughout the years and has given me a lot of good experiences”
– ”Voluntary work helps in creating a well-functioning local community. For children, it is important to promote active living. And it is also developing you personally. Unity and identity”
– ”For many years, I had children in the club and therefore I am involved in the work. I have enjoyed playing football and would like to give others the same experience. ”
”As a child, I experienced a lot of good things. Now when I have the opportunities, I feel obliged to give something back.” ”Have always been a volunteer in community sport and for more than 50 years. Nice to see things grow and do something good for a lot of people. Not least the social element of the club. And you get to know a lot of people and build some friendships for life”.
– ”Have been involved in football for 45 years. Good friends and good network. Be part of making a difference on a voluntary basis”.
– ”For 20 years, I have played football in the same club. To have a good club I also have to take responsibility”
– ”The community and the joy of working with other people who love football”.”Football has always meant a lot to me and I think you have an obligation to contribute to the continuation of football. Every community needs a football club. Everyone should have an opportunity to do team sport which can also be a great foundation for your future life.”

Learn more about our research on football and CSR here: https://www.tandfonline.com/doi/full/10.1080/16184742.2018.1546754

About the Author

Esben Rahbek Gjerdrum Pedersen is Professor at the Department of Intercultural Communication and Management at Copenhagen Business School. He researches CSR, Corporate Sustainability, Non-financial Performance Measurement, Supply Chain Management and Process Management.

By the same author: The Business (and Politics) of Business Cases

Photo by Click and Boo on Unsplash

The Government of Business Responsibility

By Erin Leitheiser.

Governments play an important role in shaping the roles and responsibilities of business in society.

Promoting responsibility directly and indirectly

Whilst I have previously blogged about how business sometimes leads government in helping promote the public good, this in no way means that governments are not actively seeking to shape and promote responsible business conduct. Governments do this in a variety of ways, and frequently. As such, this post provides an overview of some of the notable policies put into place in just the last few months by governments world over, as well as some reflections about what this means for business responsibility.

Can companies be held liable for climate change?

According to a newly-filed suit, proponents hope that the answer will be “yes”. Following a 3-year investigation of Exxon Mobile, New York’s attorney general is suing the company not for its role in creating climate change (legal theories on these grounds have yet to gain much support) but for defrauding its shareholders by not following through on its promises to factor climate change risks – primarily regulatory and financial – into its business decisions.

Takeaway: Shareholders continue to represent a powerful avenue for legal action, and if successful, this case could break new ground on linking environmental and fiduciary responsibilities.

Everyday plastic objects pollute oceans and beaches.

Single-use plastics banned in Europe

The European Parliament voted for a sweeping ban on single-use plastics – such as straws, cotton swabs, plates and cutlery – due to come into force in 2021. Affected products have “valid alternatives” available and are estimated to represent more than 70% of the plastics polluting our oceans.

Takeaway: If business doesn’t move quickly enough to re-conceptualize products more sustainably, governments will increasingly exercise their power to exclude such products from the marketplace altogether.

Information Accessibility

In India, the Department of Telecommunications recently approved some of the strictest legislation regarding net neutrality, which protects Indians’ rights to have free and fair access to the internet. Providers will not be allowed to prioritize, promote, curtail, throttle or in any other way manipulate users’ access to content. In a de-evolution, the US recently repealed such protections for its residents. Google has increasingly come under fire for Dragonfly, it’s forthcoming censored search engine for the Chinese market.

Takeaway: The manipulation of citizens’ access to information is unethical, even if profitable.

California Leading the U.S. (and the world?)

Over the summer California established ambitious goals for 100% clean electricity and carbon neutrality by 2045. Last month, it became the first state to require publicly-traded companies to include women on the boards of directors. Now in October, the state has signed into law legislation requiring drug stores and hospitals to fund take-back programs to curb the improper disposal of needles and leftover prescription drugs which can lead to accidental poisonings and environmental harms.

Takeaway: State- or other non-federal level governments are sometimes the most nimble in their speed and vision for promoting business responsibility.

*California paved the way to become a carbon neutral state.*

NAFTA updated to promote sustainable forestry

Updates to NAFTA – the North American Free Trade Agreement – aim to crack down on illegal logging and promote sustainable forestry. In particular, it hopes to help address the deforestation of the Amazon – happening in large part due to demand by the NAFTA countries – by promoting sustainability within the logging industries of the U.S. and Canada.

Takeaway: By re-structuring the rules of the marketplace, governments can both address sustainability problems (e.g. deforestation) as well as promote more sustainable industry alternatives.

Updates to NAFTA against illegal logging and sustainable forestry.

What do businesses think of the ever-changing regulatory environment? While business is typically painted as anti-regulation, this is hardly a universal truth. Companies – particularly the more responsible ones – often want legislation. For example, Apple’s chief executive Time Cook recently spoke to the European Parliament where he warned against the weaponization of personal data, praised Europe’s new GDPR regulations, and called for similar (tougher) regulation in the U.S. as well. (Though it’s worth noting that companies may embrace or eschew responsibilities and legislation on a case-by-case basis; for example, Apple has just been hit with a 10 million Euro fine for its strategy of “planned obsolescence” of its phones).

Governments have and will continue to play an important role in shaping the roles, responsibilities and expectations of business in society.

Erin Leitheiser is a PhD Fellow in Corporate Social Responsibility and Sustainability at Copenhagen Business School. Her research interests revolve around the changing role and expectations of business in society. Prior to pursuing her PhD, she worked as a CSR manager in a U.S. Fortune-50 company, as well as a public policy consultant with a focus on convening and facilitating of multi-stakeholder initiatives. She is supported by the Velux Foundation and is on Twitter as @erinleit.

Photos by: Jason Blackeye on Unsplash, and from pixabay.