The Governance of Corporate Responsibility
Dr Heiko Spitzeck
Toby Thompson
Hello, my name is Toby Thompson. I am here today with Dr Heiko
Spitzeck, Lecturer in the Doughty Centre for Corporate Responsibility
here at Cranfield.
Heiko, you just recently published a ‘How To’ Guide on Corporate
Governance; how should boards integrate corporate responsibility
and why should they integrate that into their dealings?
Heiko Spitzeck
Well I think boards and board members need to be prepared for a
new set of questions asked regarding corporate conduct and I think
the recent scandals and media make it very obvious that board
members are the representatives of the organisation and they need
to respond to criticisms on executive pay schemes, on child labour
issues, on societal issues which are picking up relevance in the
media.
Toby Thompson
So isn’t it just a knee jerk reaction to legislation then? Are they just
going through the motions? Isn’t that what a criticism could be of
that?
Heiko Spitzeck
I think there are new legislative environments coming around; you
see new codes – the combined code of the UK has just been revised,
new legislation is coming up in order to deal with that crisis. But it
seems that every time something is appearing, regulation kicks in,
but it doesn’t really have a beneficial impact on corporate conduct.
So what our research – and this is a ‘How To’ Guide which is aimed at
practitioners and board members – what our research tells us is that
basically you can’t legislate for acting with integrity and we need
boards to act with integrity and be clear about their values and their
principles for corporate conduct. And the board has a very
important role to play in that regard.
Toby Thompson
So presumably having an eye to legislation, but you can’t legislate for
change of behaviour presumably?
Heiko Spitzeck
We just had a discussion at the KPMG headquarters, this Tuesday,
for the launch of the Guide and the main conclusion there was that
one size doesn’t fit all. And therefore legislation can be used as a
steering guideline and we see a lot of the international initiatives are
not having the prescriptive character; they are more into giving
recommendations for good corporate governance.
So what we found really essential is that the board knows the
materiality of the corporate responsibility issues – so you know how
it affects the business case and board members need to be able to
Knowledge Interchange Online© Cranfield University
May 2010
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Dr Heiko Spitzeck
communicate which issues impact corporate strategy and how; and
how that frames the long term perspective of the organisation.
Toby Thompson
So presumably the guide also talks about how – maybe via those
methods – trust is earned inside of corporates by the boards?
Heiko Spitzeck
Exactly. Trust is not earned by adhering to legislation which is
coming up regarding corporate conduct; it is acting with integrity,
especially in times of crisis.
Toby Thompson
So where are the critical discussions inside of the organisations for
this sort of thing to happen and embed – to be embedded?
Heiko Spitzeck
One is about leadership – who is taking the lead for CR initiatives and
strategies. And we are increasingly seeing that boards, the CEO and
the board is taking the lead position for corporate responsibility
initiatives, but equally we see it spreading into the boardroom. So
whereas traditionally the CEO was taking the agenda as the most
visible person representing the organisation, we see it now spreading
into the boardroom with more and more board members becoming
involved and formulating CR initiatives.
For example, Marks and Spencer who has the corporate responsibility
committee renamed into a How We Do Business Committee, to really
embed it into the DNA of the organisation.
Toby Thompson
And presumably succession planning is important too, for people to
think about who is coming up?
Heiko Spitzeck
Exactly, one of the discussions on our meeting at KPMG was from an
executive search company and she said for us it is important to look at
what is the profile in terms of corporate responsibility issues of
incoming directors and candidates; as well, for corporations, it is
important to integrate that in selection criteria, as well as training for
board members.
Toby Thompson
Heiko, thank you; that sounds like very useful advice for board
members. I recommend that you read it, it is downloadable from the
Doughty Centre website. Thank you for watching.
© Cranfield University
May 2010
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