Corporate digital responsibility spans four areas — social, economic, technological, and environmental — that should be merged under one organizational umbrella.
Sustainability and digitization have been two of the most significant global business trends over the past several years. Sustainability concerns humanity’s relationship with the natural world, while digitization focuses on the virtual world. Lacking obvious common roots, they have developed more or less independently of each other, but it’s time for these two worlds to merge.
The need for this merger is simple. The risks to humanity of poor or unethical digital practices are increasing rapidly and can no longer be ignored. Imagine the damage that could be caused by a weapon controlled by malevolent AI, the impact of a total loss of personal privacy, or the social and economic costs of unregulated gig-economy jobs with few or no social protections. The potential outcomes of these and other scenarios are starting to be openly discussed within governments and civil society. Now corporate entities need to join the debate.
The corporate world is, in fact, beginning to realize its responsibilities for protecting the planet. Large entities like Unilever have long championed sustainability as a key corporate objective. The 2020 World Economic Forum in Davos, Switzerland, chose “how to save the planet” as a guiding theme. Even the cutthroat world of private equity is taking note, as evidenced by BlackRock’s recent announcement that it will prioritize investments in sustainable entities.
These organizations realize that sustainable practices are not only good for the environment but for business as well. Unilever’s Sustainable Living Brands have accounted for more than 75% of the company’s recent growth.
Within most companies, however, the digital aspects of sustainability have been spread thinly across various corporate departments, if not entirely overlooked. Bringing these disparate and fragmented elements together under a single umbrella allows them to be addressed in a consistent and complementary manner. This new, consolidated focus is known as corporate digital responsibility. CDR is a subset of corporate social responsibility, an already established entity in many organizations.
I define CDR as a set of practices and behaviors that help an organization use data and digital technologies in a way that is socially, economically, technologically, and environmentally responsible.
The Four Categories of CDR
Each of CDR’s four categories contains components that engender significant opportunities to create competitive differentiation. (See “The 4 Categories of Corporate Digital Responsibility.”) They may also become threats if not appropriately addressed.
Social corporate digital responsibility involves an organization’s relationship to people and society. The vital topic of data privacy protection of customers, employees, and other stakeholders is included in this area. It also incorporates aspects of digital diversity and inclusion, such as bridging an increasing divide between digital haves and have-nots across geographies, industries, social classes, and age demographics.
Economic corporate digital responsibility concerns responsible management of the economic impacts of digital technologies. Much has been said about the replacement of human jobs by robots and other digital technologies, and this is certainly a relevant part of economic CDR. Economic CDR also relates to the creation of new digital-era jobs that are enriching, purposeful, and interesting. Emerging evidence suggests that jobs created by the so-called gig economy are often uninteresting, repetitive, and low paying. Questions are also arising about how companies share the economic benefits of digitization with society through taxation of digital work, and if and how the original owners of monetized data are fairly compensated.
Technological corporate digital responsibility is linked to the responsible creation of technologies themselves. For example, biased or inaccurate AI decision-making algorithms can lead to unfair or discriminatory practices, as has been noted among many recommendation engines. In 2017, more than 1,000 AI researchers, including luminaries such as Elon Musk and Stephen Hawking, signed an open letter calling for a ban on the weaponization of AI and similar digital technologies. Other technologies, such as so-called deepfake videos in which people are realistically made to appear to be saying or doing things that they did not, can also have harmful effects on society.
Finally, environmental corporate digital responsibility concerns the link between digital technologies and the physical environment, including issues of responsible recycling or the disposal of old computer equipment. Extending obsolescence cycles by one year, for example, could have an enormous positive impact on the environment. Another consideration is limiting power consumption, including reducing the use of electricity to support bitcoin mining.
A Consolidated Approach to Digital Sustainability
Many organizational processes, practices, and projects exist to address digital aspects of social, economic, technological, and environmental responsibility, but they’re rarely coordinated or optimized. Cybersecurity, for example, tends to be the responsibility of IT departments, whereas workforce automation may fall under the purview of operations, and yet other elements may sit with HR, legal, engineering, R&D, or particular business lines.
To ensure better mitigation of risks and the capturing of rewards, these disparate areas should be coordinated collectively. The responsibility for this consolidated approach could sit with a CDR office that coordinates and oversees the role of digital technologies to promote ethical and sustainable business practices. This office should consist of a cross-functional team of key decision makers from areas such as IT, legal, supply chain, and administration rather than yet another siloed corporate function.
Organizations need to examine how their digital technologies and practices impact employees, customers, and society at large. Failing to do so may lead to a whole host of problems, such as employee resistance, as we have seen recently at Amazon and in Silicon Valley giants such as Google. Unexamined or insufficient digital sustainability practices may also lead to falling revenues and profits as civil society demands more-responsible practices, targeting organizations that are seen to fall short. Failure to act could also lead to more stringent regulations, such as the EU’s GDPR legislation, which includes severe penalties for noncompliant behavior or inaction.
As sustainability and digitization trends continue to grow, CDR will become increasingly relevant for organizational performance, both to mitigate risks and to delight increasingly digitally and sustainability-savvy consumers in new ways. Organizations that fail to take a synergistic and coordinated approach to CDR may find themselves in trouble with customers, employees, and regulators.
This article first appeared in www.sloanreview.mit.edu
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