In some ways, what you call the collective effort to address the ethical issues associated with the use of data and analytics doesn’t really matter as much as actually addressing them in the first place. Yet in other ways, what you call these efforts can tell people something about how they are perceived by your firm. So it’s worth giving some thought to names, in order to avoid misunderstandings.
Data ethics as a term has been around for several years. It’s shorthand for the ethical issues associated with how you collect and use data, and with how you design and apply analytics. It’s not just about data.
Corporate digital responsibility has emerged in the last year or so. The rationale behind this has been to align and then merge data ethics with the firm’s overall corporate social responsibility programmes (CSR). Such programme have been receiving a lot of attention recently, under the heading of ESG – environmental, social and governance.
Clearly, when a firm handles its data ethics issues within a CSR or ESG programme, there’s some sense in referring to this as corporate digital responsibility. Yet not all firms handle data ethics in this way. Many run their data ethics work though a group privacy function, a compliance function or the general secretary’s team. And the choice of which of these three is best is secondary to the remit, priorities and support given to such work.
Three Risks
In my opinion, bringing data ethics into a CSR / ESG programme exposes the firm to three risks. The first risk is that of dilution. CSR/ESG programmes can (and indeed should) cover a lot of issues, under the umbrella terms of environmental, social, economic and political. Each of those four terms then cover a myriad of sub-themes. It’s easy for data ethics to disappear into all this.
This doesn’t matter so much if those programmes are based upon a transparent and substantive materiality assessment. Unfortunately (and this is the second risk), that’s far from being always the case. Many CSR/ESG programmes in the insurance sector focus on largely on environmental issues and community issues. To be honest, I rarely find anything substantive happening on ethics within a CSR/ESG programme.
And thirdly, there’s something in the nature of data ethics that gives it a more direct impact on the lives of the customers of insurance firms, than most of those CSR sub themes. That’s because it is now influencing so many of the decisions that consumers experience in relation to their quote, price, cover and claim.
My Experience
Twenty one years ago, I re-orientated my career away from alternative risk finance deals and management of one of the UK’s biggest insurance programmes, and towards the social and ethical side of insurance. I obtained a qualification in social accountability (as CSR was then called) at Warwick University Business School and began working as an independent consultant. And I then became an associate practitioner in social accountability at the UK’s main qualifications body for such work.
Over seven to eight years, I worked with a variety of firms in insurance on a broad range of tasks. I then moved away from CSR consulting because, in encompassing so many issues, two problems emerged. The first was that firms tended to take less interest in core principles such as stakeholder engagement and materiality. And the second was that less seemed to be done as that front widened. That’s why I decided to focus exclusively on ethics and insurance.
So you can see from this that I’m unlikely to be a fan of corporate digital responsibility in place of data ethics, for it exposes it to the problems I’ve outlined above. I’m also opposed to it because it points to a ‘distancing trend’ that I’ll now explain.
Stakeholders
Back around the early 2000s, the term social accountability was rooted in stakeholder engagement. Its focus was very much on responding to audiences outside of the firm itself as an organisational entity (hence the term accountability). In my opinion, the move towards CSR diminished that focus on, and primacy of, stakeholder engagement. And now the trend from CSR to ESG continues this. ESG is an investor term – after all, governance is not part of the language of stakeholders and the public.
It's great that social and environmental issues are receiving more attention from firms. What’s not so great is how this often also results in a progressive lessening of stakeholder engagement. Firms want to do social and environmental issues in the way they want to, not the way outsiders expect them to.
I fear something similar would happen to data ethics if brought within a CSR/ESG programme. So by all means align with it, but not let it be subsumed by it, as will often be the case.
What do you think? Let me know your thoughts by commenting on my Linkedin post for this comment piece.
