CSR without IC is an empty promise

May 11, 2011 by  

There is a great discussion going on at the IC Knowledge Center about a new EU report on non-financial reporting. Here’s my take:

I think it’s interesting that there were 259 respondents to the public consultation. That shows that there are a lot of people out there thinking about the many facets of non-financial reporting.

But I share both Anne Marie and Abhijit’s concerns that there is no mention of IC. In fact, the report actually makes an explicit definition on page 2 of non-financial reporting as CSR (Corporate Social Responsibility). While CSR is an important external focus for companies, there also needs to be an internal view of sustainability around knowledge intangibles–the human, relationship, strategic and structural knowledge that together drive corporate success.

CSR makes everyone feel good and is very necessary. But no one will truly be able to meet the ideals of CSR without reforming how companies are managed internally–with the holistic view of creating long-term sustainability based on husbanding of the organization’s knowledge assets for maximum innovation, maximum productivity and maximum long-term profitability.

Thinking long term means thinking how to create a sustainable business internally (i.e. profitable over the long term) and externally (i.e. consistent with CSR principles). This implies caring about the development of your people, knowledge and relationships (see this manifesto for intangible capitalists).

CSR without IC is an empty promise. How can a company truly be sustainable if it treats its people as disposable, doesn’t consider the sustainability of its knowledge when making outsourcing decisions, loses its innovative capacity, treats its partners unfairly?

Any company that thinks about husbanding its IC will also think in a way consistent with CSR. You cannot have one without the other. The CSR conversation must lead back to the IC conversation.

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