The Volkswagen emissions scandal is a poignant reminder of the fragile nature of trust and reputation for organisations and reinforces the importance of being a responsible business.
It was once said that it can take years for a company to fill the reservoir of good will and a matter of hours to drain it. The scandal, which has already seen the brand lose a CEO and market value, is a reminder that there simply is no place for deception in modern business. Corruption, no matter how hidden, will eventually come out - with devastating consequences for reputation and the bottom line - even for a brands as trusted as VW once was.
However, as the fallout continues to fill column inches, I was struck by a recent Telegraph article which, somewhat gleefully, positioned the scandal as evidence of the unmasking of corporate social responsibility as a 'dangerous racket'. The writer cites VW's once lauded 'CSR' credentials as evidence that CSR is simply a façade, allowing companies to parade their virtue, and look good, while internal standards are allowed to slip.
To a certain extent I agree - CSR IS dead - but only as far as the old school model of corporate social responsibility that the writer speaks of. There is a fundamental difference between the corporate social responsibility outlined in this article - good deeds and philanthropy acting as costly window dressing to spruce up the appearance of a business - and responsible business which is integrated into the fabric of how a business operates and how its people behave, at all levels.
The truth is, all the carbon offsetting, volunteering or award wins in the world won't offset bad behaviour occurring elsewhere in a business. Responsible businesses are those which go beyond CSR to recognise that business is central to creating a fairer society and more sustainable future. They understand that business has a role to address the most pressing societal and environmental issues and that a positive relationship between business and society is mutually beneficial.
Responsible business is not about how a company spends its money, on philanthropy or good causes. It's about how business makes it money and in the process, how it treats the planet, employees and suppliers and operates fairly and inclusively to all.
Furthermore, genuine responsible businesses are those which create a culture within their business in which pithy values statements and slogans created by branding consultants and written everywhere from the boardroom wall to mugs in the office kitchen - actually influence the behaviour of employees at all levels.
The far reaching nature of this scandal makes it reasonable to assume that a number of people within the business were complicit to the deception. There is sadly still huge pressure within organisations for employees to achieve profits at all costs and we know from our research that two fifths of managers' feel pressured into behaving unethically. VW actively rigging its emission testing represents a fundamental disconnect between values and the right behaviour. It also highlights how important it is for business leaders to cultivate an environment in which their employees not only understand the wider purpose of their business, but demonstrate this understanding through their everyday work. Actively championing doing the right thing at all levels of business will give employees the confidence to speak out when their company doesn't live up to the standards society expects.
Simply delegating responsible business to a CSR team, department or programme has had its day, and forward thinking companies have moved far beyond this. I know from spending time in the boardrooms of some of the UK's biggest brands from across our membership, that the CEO's who really get this are genuinely thinking about the practical ways in which their entire business can create value which goes far beyond financial return. They also recognise the business case underpinning responsible behaviour with benefits ranging from unlocking innovation to attracting the best employees.
So should businesses, as the author suggests, simply scrap costly CSR spend and donate the funds towards good causes? In a word - no.
To suggest so is naïve and simply misses the point of the fundamental role of business in society. I would hope that one day we will not need CSR departments, and programmes, because business will as a matter of course operate responsibly.
Until then, this scandal shows us there is work to do and a real opportunity for business to step up and make responsible business the norm.