Bridging corporate social responsibility and social impact assessment

Abstract

Corporate social responsibility (CSR) and social impact assessment (SIA) share foundational values. Yet even where a single corporation espouses CSR and carries out SIA, the two often pass like ships in the night. Drawing upon recent literature and experiences from a decade of applied social research in CSR and SIA in the resources industry, this professional practice paper identifies three key bridging points through which CSR and SIA could be better linked and strengthened in future: policy–practice gaps, voluntary versus involuntary regulation and internal versus independent implementation.

Keywords::

• corporate social responsibility
• social impact assessment
• policy–practice change
• opportunities

1. Introduction

Corporate social responsibility (CSR) and social impact assessment (SIA) share foundational values; that is, to address the social implications of corporate activities with concern for human rights, livelihoods, community engagement in decision-making, ethical behaviour and the valuing of local knowledge and the environment [International Association for Impact Assessment (IAIA) 2003; Carroll 2008; Crane et al. 2008]. Even where a single corporation espouses CSR and carries out SIA, however, the practices often appear as two keeps to the same castle. Each practice may be strong in its own right, bolstered by internal policies or external regulations (or both), each may have its dedicated guardians within the firm, and each its champions advocating its values and ensuring its regular practice, yet they remain largely unbridged. This is disappointing, as crafting greater connections between firms' CSR and SIA could strengthen both practices.

Three key areas of divergence in the relationship between CSR and SIA are identified here and explored as potential bridging points: the policy–practice gap, formal versus informal regulation and internal versus independent implementation. Examples are drawn from the relevant literature and from a decade of applied social research and practice in the mining sector, especially operations managed by Australian companies. The paper uses these examples to reflect upon whether and how CSR and SIA could or should connect. Can these towers be bridged, creating a more fortified company, better able to serve its community and stakeholders?

This professional practice paper rests on a few key assumptions. First, and perhaps most importantly, the paper assumes that, for the most part and in many regions of the world, CSR and SIA remain distinct practices with their own domains and are used by corporations, governments and communities. Secondly, the paper presumes that there is value to be gained in exploring key points of separation between the two practices to suggest a means of improving linkages. Finally, the paper assumes that the two practices are informing one another in their current states, but that this dialogue remains mostly ‘subconscious’ or indirect. While this paper is necessarily limited in the breadth and depth of its engagement with the corpus of CSR and SIA literature, it nevertheless raises important questions and sparks a concerted dialogue about the potential value to be gained from a more purposeful interaction between CSR and SIA.

1.1. Contemporary CSR

CSR is the dowager cousin to SIA, dating back at least to the industrial revolution (Carroll 2008). Yet CSR remains challenging to define. It manifests in a mixture of approaches, each of which has dominated practice at particular stages in history (Frederick 2008). Contemporary CSR is no longer relegated to the realm of reputation management. It has moved beyond early approaches linked to public relations (Carroll 2008) to more nuanced models that posit CSR as a means of risk management (Husted 2005) or that view the firm as global citizen (Wood et al. 2006) or as a producer of ‘shared value’ (Porter & Kramer 2011). CSR is at its best where stakeholder views are considered and used to inform corporate policy and practice (Jamali 2007), as evidenced through corporate–community partnerships, long-term community investment and the creation of sustainable communities through concentration on adding value throughout the supply chain (Blowfield & Frynas 2005; Wood et al. 2006; Porter & Kramer 2008).

Today, 93% of CEOs surveyed by the United Nations Global Compact say that acting in sustainable, socially responsible ways is vital to their firms' success (United Nations Global Compact and Accenture 2010). Recent research asserts that CSR has become institutionalised among multinational corporations (Bondy et al. 2012), albeit in diverse ways in different national (Matten & Moon 2008) and cultural (Chapple & Moon 2005) contexts. Indeed, much CSR is built into contemporary corporate governance and risk management frameworks (Orlitzky & Benjamin 2001) and sees firms taking direct, proactive responsibility for their actions and impacts. While certain scholars are beginning to argue that the responsibility of the firm may have been stretched too far (Husted & Allen 2011), it is the willingness to admit culpability and take responsibility that signals leading practice.

Furthermore, progressive regulation now incorporates notions of CSR; from the transparency measures inherent in the Dodd–Frank Act in the USA (US Congress 2010), to the Law of the Right to Prior Consultation of Indigenous and Tribal Peoples in Peru (UK AID and Fundar 2011), to draft regulation concerning Australia's emerging coal seam gas industry (COAG Standing Council on Energy and Resources 2012). CSR is mainstreamed.

1.2. Contemporary SIA

SIA's close historical alignment with regulation makes it somewhat clearer to define conceptually, although certain leading scholars argue that considerations of social impacts have been on the agenda far longer than regulatory history suggests (Esteves et al. 2012). But when it comes to methods and practice, SIA demonstrates degrees of variability similar to CSR. SIA was traditionally deployed as a predictive measure, intended as a planning tool and usually falling within related environmental assessment laws (Freudenburg 1986). This style of ‘regulatory’ or ‘compliance-based’ SIA is strongly critiqued (Vanclay 2003) and good practitioners have long since steered away from SIA in which the means become the end, and the document created is viewed as exhaustive and final.

Somewhat paradoxically, it is in the ongoing quest for best practice SIA that we perhaps see the most diversity, as practitioners and scholars test and seek out the methods and processes that will best serve the communities on which assessments are focused (see, e.g. Bond & Pope 2012; Vanclay & Esteves 2012b volume on leading and emerging practice). Contemporary SIA views assessment as a democratic means of development (Vanclay 2003) and aims to produce ethical, value-based assessment data (IAIA 2003), which are responsive to dynamic communities and to set out an agenda of community-focused assessments. Over time, such assessments can inform decision-making and may boost community involvement and empowerment (Nish & Bice 2012). Leading practice SIA is also often holistic in its approach to social issues and may specifically consider aspects such as gender, human rights, indigeneity or cumulative impacts (Esteves et al. 2012).

There is neither space nor scope to detail fully the tenets of leading, contemporary SIA. But like CSR, it is possible to delineate a few central points. First, leading practice SIA is not static and one-off, but a dynamic and responsive process that is integrated throughout a project's life. Practices may include the involvement of communities in measuring and defining impacts (Vanclay & Esteves 2012a), extensive and ongoing stakeholder engagement, community-based agreement making (Nish & Bice 2012) and use of deliberative democratic methods (Hartz-Karp & Pope 2012), among others. The shift from an ‘anticipatory’ SIA to one that is iterative and ongoing across a project's life marks an important transition. Importantly, it also mirrors contemporary changes in CSR practice, in which a shift is being made from one-off, philanthropic or reputation-focused programmes towards ongoing corporate–community partnerships or social development programmes (Harvey & Bice 2014).

Secondly, contemporary SIA centres on stakeholder engagement, identifying and involving key stakeholders in both assessing impacts but also informing recommendations for mitigation or avoidance (Nish & Bice 2012). Such approaches may involve the formation of community-consultative committees (or similar), espouse ‘free, prior and informed consent’ (or ‘consultation’), and actively engage community stakeholders in impact identification, action planning and future visioning. In the Upper Hunter Valley of Australia, for instance, communities affected by the local coal mining industry are actively participating in an ongoing dialogue process as part of the industry's effort to identify and address its cumulative impacts on the region (Australian Centre for Corporate Social Responsibility 2011; New South Wales Minerals Council 2013).

Thirdly, best practice SIA is principled and value-based. It is ethical and transparent, holding respect for communities and local environments most dear. Very recently in this journal, discussion emerged among impact assessment (IA) scholars and practitioners as to whether and how a code of ethics may be developed (Vanclay et al. 2013). Such discussion represents the central importance of ethical practice in contemporary SIA.

Finally, leading practice SIA is characterised by progressive professionalisation in which practitioners employ proven assessment methods, robust measurement tools, critical analysis and strong theoretical linkages to social science. As the adoption of IA principles and potential creation of an ethical code of conduct suggest, IA – in all its diverse forms – is coalescing as an identifiable profession and industry. The work of the IAIA is seminal in this regard, and intergovernmental bodies, such as the World Health Organisation and United Nations, bolster the professionalisation of certain approaches to IA (i.e. health IA and human rights IA, respectively) through the recognition of and support for the practice (Winkler et al. 2013).

The above definitions and practice summaries demonstrate that contemporary, best practice CSR and SIA share essential concerns and deploy similar values to address them. But do the two practices inform one another, even if only indirectly? And could better linkages between SIA and CSR ultimately generate holistic improvements for both communities and companies? The following sections delve into three areas of CSR–SIA divergence – identified through the literature and a decade of research and practice in the resources industry – in an effort to explain current separations while simultaneously pinpointing three potential bridging points between CSR and SIA.

2. Bridging point one: the policy and practice gap

Both CSR and SIA frequently suffer from a gap between policy/principles and practice, a phenomenon new institutionalist scholars term ‘decoupling’ (Meyer & Rowan 1991). In brief, decoupling occurs where an organisation's on-ground practices diverge from its formal policies, values, principles, mission or ethics, usually as delineated in key organisational documents (Meyer & Rowan 1991). For example, many major mining companies now have CSR policies (Jenkins 2004), while SIA has its International Principles for SIA (IAIA 2003). Such documents provide a critical benchmark for expected practices and behaviours. At the same time, however, they may establish rational ideals which are either difficult or impossible to achieve, given the complexity and ‘irrationality’ of on-ground situations (Meyer & Rowan 1991).

Take a case of CSR in mining in the first instance. A recent, three-year study into the CSR policies and practices of leading, multinational miners operating in Australia found that the majority take a decentralised management approach to their corporate social responsibilities (Bice 2012). Thus, CSR policies are crafted and approved at a corporate level but individual business units bear implementation responsibilities in whatever manner on-ground staff (usually community relations) deem appropriate. Theoretically, this should be a workable model. In practice, however, the study found that even where community relations staff hold good intentions, attempt to uphold corporate policy and are knowledgeable about best practice CSR, they are hobbled by resourcing and time constraints, coupled with immediate community demands and ‘firefighting’. In these particular cases, such decoupling led to companies rolling out CSR-related programmes that were mostly ad hoc, reactive and failed to address priority community needs, sometimes to the detriment of community benefit or even companies' own reputations (Bice 2013).

In the case of SIA, decoupling is particularly complex because it may operate externally and internally to the company. First, there may be discrepancies between an SIA practitioner's beliefs, values and ideals concerning what constitutes best practice SIA and his/her ability to implement such practice given the client's brief, scope of work, budget, timing, openness or resources. At a minimum, practitioners are regularly faced with decisions involving social or environmental trade-offs (Retief et al. 2013). Research suggests that such tensions are part and parcel of an SIA consultant's life, and affect both the assessor and the client (Wood 1998). Certainly, such tensions impel (at least in part) very recent calls for an ethical code for impact assessors (Vanclay et al. 2013).

Secondly, compliance-based approaches to IA appear to contribute to weariness and cynicism, positioning it largely as a ‘tick-box’ or regulatory burden, as opposed to an opportunity to manage risk proactively or improve community relations (Bice 2012). Further adding to the issue's complexity, SIA remains voluntary in many jurisdictions, including Western Australia, Canada and the EU. Yet recent changes like the Australian Stock Exchange's updates to its Corporate Governance Principles and Recommendations may compel SIA, as listed companies will be required to consider and report on non-financial risks (Australian Stock Exchange 2014).

Authors like Lockie (2001), writing in this journal, note the marginalisation of SIA as a practice and its frequent disconnection from public participation, despite the Principles' focus on SIA as a source of engagement and development. Most recently, scholars have questioned whether the proliferation of IA approaches may constitute a dilution of the practice as a whole (Morrison-Saunders et al. 2014). All of these factors arguably combine to create a situation in which on-ground SIA practice may be decoupled from ‘policy’ or best practice principles. Thus, the transformative potential of IA may be limited by perceptions of regulatory burden and assessment implementation styles and choices that ultimately undermine good practice.

Decoupling between formalised CSR and SIA policies or principles and actual practices, like that highlighted above, is both ubiquitous and problematic. It creates divides between corporate intention and corporate behaviour. Yet such decoupling is also seen as necessary to corporate operations (DiMaggio & Powell 1991; Meyer & Rowan 1991; Scott 1994). Without the malleable space between policy ideals and on-ground pragmatics, firms would be overly bureaucratised, excessively rationalised and suffer from inertia (DiMaggio & Powell 1991; Meyer & Rowan 1991). Given this complex scenario in which the policy and practice gap affects both CSR and SIA, how might better cohesion between the two reduce the policy–practice gap?

A recent example from the Bowen Basin Region, Queensland, Australia, demonstrates how stronger linkages between SIA principles and findings and CSR policies and consequent programming can yield positive outcomes for corporations and communities. The BHP Billiton-Mitsubishi Alliance (BMA) is Queensland's largest regional employer and a global leader in seaborne metallurgical coal. The Bowen Basin region is home to several coal mines, operating out of regional or rural towns that also rely on agriculture, forestry and fishing industries. As of the 2006 census, almost one in five workers in the region was employed in the mining industry (Office for Economic and Statistical Research 2010).

Through regular socio-economic IAs, BMA was aware of both its socio-economic contributions to the region, but also the challenges it posed to smaller suppliers and local businesses. In particular, BMA identified that many local, small-to-medium enterprises (SMEs) that offered skills or services pertinent to its operations did not have the experience or resources necessary to tender successfully against larger mining contractors. At the same time, BHP Billiton (2013b) has a corporate CSR commitment to ‘building the capacity of local businesses to provide us with a diverse range of services and products’ (p. 37). In this example, knowledge from IA was linked with corporate CSR commitments to create a community development programme targeted at a clearly defined community need: the BMA Local Buying Program.

Established in 2012, the BMA Local Buying Program aims to ‘boost’ local business' participation in its operations ‘by supporting skills-building activities and creating new educational and business opportunities’ (BHP Billiton 2013a, p. 1). The programme offers local SMEs a simplified tendering process and access to a range of business development training. In its inaugural year, A$12.3 million in work packages was awarded to local businesses while other local suppliers, such as safety gear retailers, reported a boost in business (BHP Billiton 2013a). BMA's establishment of the local buying programme offers a clear example of the opportunities and benefits possible where identified impacts are used to inform CSR programming, with decisions made based on key values and principles. Such a bridged approach avoids the types of ad hoc CSR programming noted above while ensuring that the results of IA are meaningful and contribute to community benefits.

3. Bridging point two: voluntary versus involuntary regulation

CSR and SIA are also often separated by the nature of frameworks and regulations that guide their requirements and implementation. In many instances, CSR is ruled by voluntary regulation (e.g. guidelines, voluntary frameworks and signatory memberships), while SIA is linked more closely to involuntary regulation – the statutory and legal requirements set out by governments, agencies and regulators [e.g. legislation, stand-alone licensing requirements or environmental impact assessment (EIA) statutes]. This situation is very complex, however, as certain countries, such as India, are beginning to regulate CSR, while, as noted previously, SIA is not a statutory requirement in certain places.

What is perhaps most important here is that both voluntary regulation and involuntary regulation have been connected to legitimacy (Power 1997). In the case of CSR, for instance, the growth of widely accepted, voluntary sustainability auditing frameworks, such as the Global Reporting Initiative (GRI), is prompting many resources companies (like their counterparts in other industries) to invest significant funds in the practice. Yet the mostly voluntary nature of CSR regulation also means that firms may be confounded by an ever-growing plethora of guidelines and initiatives from which to choose. Recently, Vogel (2008) identified over 300 global auditing frameworks to guide the implementation of CSR. Mining companies, for example, often look to their peers or industry bodies to help determine which CSR frameworks are most appropriate, partly in response to this situation. Thus, major global miners adopt the International Council on Mining and Metals (ICCM) Sustainable Development Framework, GRI and UN Global Compact. Importantly, the GRI's ‘mining and metals sector supplement’ includes a performance indicator concerning the assessment of social impacts, possibly offering one of the few direct connection points between CSR and SIA, related to regulation (GRI 2010).

While voluntary CSR initiatives like the GRI may help to bridge CSR and SIA, the perpetuation of voluntary frameworks may simultaneously preclude the development of involuntary regulation of CSR (Gunningham et al. 2004; Vogel 2008). The Australian mining industry's emphasis on voluntary codes and standards in relation to CSR, for example, is one aspect of the Minerals Council of Australia's agenda to reduce or discourage ‘red’ or ‘green’ tape (Forrestal & Massola 2013). Interestingly, leading IA practitioners have recently suggested in this journal that, where SIA is not a statutory requirement, its completion may be ‘motivated by corporate social responsibility’ (Baines et al. 2013).

Conversely to CSR, SIA falls more often within the realm of formal compliance and is used to progress licensing applications and respond to government directives. Where SIA falls under statutory regulation, it usually affects how the practice is treated by companies. For instance, regulatory compliance requirements often result in SIA being located in sections of a company separate to those which may deal more directly with CSR. This separation occurs despite the requirements for such regulation being strongly aligned with the central foci of CSR. Such assessments are firmly linked to a company's ability to earn its ‘social licence to operate’ and are an essential step in their applications for exploration and operational licences being granted in communities (Bice & Moffat 2014). In addition, the results of such assessments are commonly highlighted in sustainability reports as a demonstration of companies' commitments to sustainable development issues and planning (Bice 2014).

In practice, however, compliance-based SIA receives criticism for failing to inform companies' practical decision-making, especially concerning their stakeholder engagement (O'Faircheallaigh 2004). Moreover, compliance-based SIA falters when it comes to ongoing planning and benchmarking, has limited applicability due to changing social circumstances and often incorporates little or no local knowledge (Nish & Bice 2012). In Australian examples where SIA requirements are formally regulated, they most often fall under EIA regulations, making it more likely for SIA to be located within the remit of a company's environment department or, on occasion, to be handled via auditing and governance. CSR, meanwhile, is frequently positioned alongside community relations or sustainable development (Kemp 2010). Thus, differences in the types and degrees of regulation governing CSR and SIA present a considerable gap to bridge, at least at an organisational governance level.

Examples of regulatory linkages between SIA and CSR remain rare and perhaps non-existent. Globally, growing arguments for ‘streamlining and efficiency’ that preclude ‘green tape’ (Morrison-Saunders et al. 2014) suggest that we are unlikely to see a convergence or formalisation of CSR and SIA regulation in the near future. Yet joined-up or complementary regulation could benefit both practices and the communities they seek to assist. In India, for example, where CSR legislation came into effect on 1 April 2014, corporations are legally obligated to address issues such as poverty, healthcare, education and gender equity through their actions; a demand with which best practice SIA could surely assist.

4. Bridging point three: the internal/external divide

Finally, and consequent to all of the above, CSR and SIA are often separated by the internal/external way in which work for each is commonly carried out. In the majority of large Australian mining companies, for example, responsibilities for implementing CSR programmes rest with community relations staff, with guidance from the Sustainable Development (or similar) departments at the corporate level. SIA, meanwhile, is mostly completed by independent consultants specialising in the practice. This particular separation between CSR and SIA often links directly back to the regulatory environment, adding another dimension to the challenges discussed above.

Many regulatory regimes require or imply that IAs be completed by individuals independent to the company. While the independence of the assessment provides important benefits, such obligations also create challenges for companies in terms of understanding and utilising the data generated (Bice 2012). Even where mining company employees or community stakeholders are directly involved in the collection of SIA data or discussions about what data to include in assessments, the ultimate authority for what is reported usually rests with the consultant.

The separation of on-ground CSR work from analysis of that work may contribute to companies' lack of understanding about priority community needs and, consequently, to ad hoc or reactive CSR programming. The act of assessment is an important step in understanding how a company affects communities and environments. Tradition or requirements to ‘outsource’ this step may unintentionally inhibit companies' ability to reflect thoroughly on their CSR or community relations. This is not to suggest that SIA should necessarily go ‘in house’, but that it is important to consider how company employees may be better engaged in both assessment processes and the interpretation and use of results. Equally, data independence is vital and the integrity of the IA process must be managed extremely carefully. Although many companies' community relations management approaches incorporate a traditional ‘Plan, Do, Check, Act’ method (Kemp 2009), in practice, ‘checking’ may be left up to consultants, with mining company employees expected to read and integrate the results into their activities. While such an approach seems reasonable on paper, there is something in the act of analysing a situation oneself that appears to be missed through outsourcing the assessment task.

Thus, although the use of external consultants to complete SIA is seen as a key means of ensuring the credibility and legitimacy of assessment results (Vanclay & Esteves 2012b), the very outsourcing of SIA may lead to a lack of understanding or integration of results into a company's CSR or community relations planning. Where companies find it difficult to integrate SIA findings into strategy, planning and staff activities, assessment findings and recommendations relevant to CSR are unlikely to find their way into the light. This means that valuable SIA information that could inform and improve CSR practice is likely being lost.

Better integration of the work of SIA consultants and community relations staff, and of SIA results to directly inform CSR planning and programming would enrich and strengthen both practices. Especially, where SIA is completed according to best practice – resulting in a dynamic assessment that provides ongoing insight into community concerns – the potential to transform and improve CSR may be revolutionary. CSR programmes would be less ad hoc and more proactive. They would be more likely to target research-identified community needs. A robust, social scientific evidence base would support programme choices, and the work of SIA consultants would be valued not only for its contribution to meeting compliance, but also for its potential to add value to the CSR work in which many firms now make major investments.

5. Key changes needed to bridge CSR and SIA

Three types of changes are necessary in order to bridge CSR and SIA to leverage the opportunities and benefits outlined above.

First, a cultural shift in which the values delineated in CSR policies and frameworks are better understood as relevant to and integrated within SIA planning and implementation is necessary. An improved culture around CSR and SIA would see the practices better linked based on their shared values and consequent ability to influence corporate behaviours. For example, values and expectations currently residing in firms' CSR documents or policies could be used as a check against SIA findings. Furthermore, as SIA methods improve and integrate the philosophical approach emphasised by IAIA, SIA holds the potential to influence CSR-related values, ethics and behaviours.

Many companies currently allocate SIA to compliance while viewing CSR as vital but voluntary. The semantic differences between the two practices can influence the disconnection between them. An attitudinal shift in which CSR is valued across the organisation to the same degree as compliance-based SIA would advance good practice and contribute to stronger connections between the two. At present, those staff whose roles are dedicated (in full or in part) to CSR tend also to be the ones most likely to value it. In Oceania, garnering organisation-wide buy-in for CSR remains one of the biggest challenges faced by CSR managers, across all industries (Australian Centre for Corporate Social Responsibility 2013). Attitudes to CSR must change to strengthen its links with SIA, and vice versa.

Behaviourally, a re-evaluation of the ways in which SIA and CSR are carried out is necessary. CSR's voluntary regulation and amorphous boundaries for activities can mean that sometimes companies go too far, extending into quasi-governmental roles. It is in these situations that perhaps the most important opportunities for a bridging of the two practices lie. If the results of SIA were better incorporated to inform CSR programme planning, CSR programmes could be better coupled with headquarter-level policies and, equally, SIA results would be more meaningful. Such a linking of SIA findings with CSR policies, planning and programming would also necessitate regular SIA reviews – SIA would need to become more than a one-off, beginning-of-project practice for compliance. It would, instead, become a compliance measure but also a key monitoring and evaluation component of CSR programmes. Given that many companies must now undertake SIA on a fairly regular basis due to regulatory requirements or stakeholder expectations concerning project expansions, licensing checks, etc., this approach offers an effective, efficient and thorough means of deploying the rich data gathered through high-quality SIA to craft better targeted, more meaningful CSR programmes. Ultimately, this facilitates companies to achieve the much sought after status of ‘going beyond compliance’, shapes and influences a company's social licence to operate and could improve the return on investment for SIA and CSR programmes.