CSR: Where It Came From and Where It’s Going

CSR: Where It Came From and Where It’s Going

Corporate social responsibility (CSR) calls for companies to adhere to the economic, legal, ethical, and philanthropic expectations of society at a given point in time. With roots reaching back to the 1940s and 1950s, CSR became a top priority among the world’s largest companies by the 1990s. More than two decades later, large-yet-laggardly companies, small and mid-sized businesses, and even non-profits are beginning to understand why.

Rapidly increasing and converging climate and economic issues are making social and environmental responsibility imperative, and vocal stakeholders are helping companies see the opportunity inherent in taking a proactive stance on CSR. However, as interest increases, so does confusion. Clients and curious professionals often confide to me that they do not know what CSR actually is or does. To help rectify this knowledge gap, I drew from my own graduate studies and 15 years worth of experience in CSR and PR to create this post.

One of the most widely cited academic authorities on corporate social responsibility, Carroll (1991) defines CSR according to four segments:

First, a business must consistently and successfully pursue maximum profitability as an economic responsibility. Second, a business must always be aware of and comply with all laws and regulations – at every level in the communities where it operates – related to its delivery of products or services in order to meet its legal responsibilities. Third, a business must go beyond legal or regulatory mandates and operate in a way that respects the concerns and values of society at large – and be prepared to adjust to new values and concerns in order to meet its ethical responsibilities. Fourth, a business must support – in the way it deems most effective – educational, religious, artistic, medical, social welfare, or other charitable endeavors in order to meet its philanthropic responsibilities.

Adding an internal values dimension to the classic definition, Pohl (2006) states that “CSR does not represent the content, but the tool to implement the values, beliefs, attitudes and norms, namely the corporate culture of the company.” As we can see from these definitions, CSR is an umbrella concept that we can envision as a spectrum ranging from compliance and ethics to innovation.  The most forward-looking companies may even turn their CSR programs into a transformative vehicle to support sustainable development and/or inclusive economic development in their communities of interest.

Creating a values-based CSR program

For those tasked with launching and maintaining a CSR program, I recommend approaching the initiative as an opportunity to create an authentic expression of their company’s core identity. In my experience, clients have not always integrated some of their philanthropic, engagement, operational efficiency or eco-innovation initiatives into their corporate identity, treating them as ad-hoc activities rather than an extension of their brand values. In fact, some companies that I have assessed have been surprised to learn that they were engaging in socially and environmentally-responsible practices already due to certain employee-driven behaviors or efficiency measures. Their hesitancy to own these activities as part of their brand helped me understand the source of the communication breakdown concerning CSR.

In a recent McKinsey study on sustainability’s strategic worth, which found that among executives polled, the majority recognized reputational benefits as a leading payoff for CSR but those same executives also admitted to not understanding how to derive those benefits. This limited or narrow understanding of the PR function and how it works with CSR presents a barrier to maximizing value out of CSR. (You cannot leverage a strategy that you don’t understand or appreciate.) At the same time, reducing CSR to a set of PR tactics takes the heart and meaning out of corporate social responsibility. Therefore, quality programs must stem from the core values that a company holds and displays across functions.

Any gap that exists between current practices and stakeholder expectations also represents an opportunity to develop more sustainable values within those organizations. Even while leadership may lag in terms of sustainability, no company can afford to neglect its stakeholders’ interests. Therefore, beginning with those issues most material to stakeholders is a good rule of thumb when launching a CSR program. In fact, companies are becoming increasingly aware of the brand risks of failure to meet stakeholder expectations for social and environmental responsibility.

The past several decades have seen a rapid rise in anti-corporate campaigns spearheaded by labor unions, activist groups, and coalitions. A prime example is Nike, which came under fire due to exploitative labor practices. However, by leveraging its CSR program to share progress of its young Asian factor workers – many of them female – the company was able to give labor a voice, raise awareness, and elevate its brand equity at the same time. As this and many other examples illustrates, companies that strive to meet expectations of stakeholders such as investors, NGOs and employees often enjoy an increase in consumer satisfaction as well.

While expectations of CSR have been largely voluntary, companies benefit by adhering to industry best practices to ensure accountability, consistency, and transparency. One of the most widely accepted practices is CSR reporting, and one of the most widely recognized standards for CSR reporting is the Global Reporting Initiative (GRI) framework. GRI is an international independent organization that helps businesses, governments and other organizations understand and communicate the impact of business on critical sustainability issues such as climate change, human rights, corruption and many others. Another platform called the Carbon Disclosure Project (CDP) focuses on reporting for greenhouse gas emissions. A lesser known but increasingly important standard is the Plastic Disclosure Project (PDP), which allows organizations to report on their ecological footprint in terms of plastic use, waste and recycling. CSR reports in any credible form – especially when complemented by other formal and informal CSR practices – are valuable tools for aligning stakeholders around sustainability goals and adding value to the brand.

More than a vehicle for mitigating risk, a comprehensive CSR program transcends reputational goals, enabling companies to derive benefits that go well beyond better public relations. By integrating CSR values into their core business, companies can maximize cost savings, further innovation, and create shared value for all stakeholders. For example, according to executives’ responses to the aforementioned McKinsey global survey, sustainability is becoming a more strategic and integral part of their businesses. In past surveys, when asked about their companies’ reasons for pursuing sustainability, respondents most often cited cost cutting or reputation management. Now 43 percent (up from 30 percent in 2012) say their companies seek to align sustainability with their overall business goals, mission, or values. Watch this space for my next article on getting value out of values-based CSR.

References

Carroll, A. B. (1991, July-August). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders—Balancing economic, legal, and social responsibilities. Business Horizons, 34, 39-48.

Kim, S.Y. and Park, H. (2011). Corporate social responsibility as an organizational attractiveness for prospective public relations practitioners. Journal of Business Ethics, 103, 639-653.

Pohl, M. (2006). Corporate culture and CSR: How they interrelate and consequences for successful implementation. The ICCA Handbook on Corporate Social Responsibility: John Wiley & Sons Ltd, West Sussex, UK, pp. 47–59.

One thought on “CSR: Where It Came From and Where It’s Going

  1. A nice piece that covers several bases. It starts on a solid base (although more on that below) of Carroll, showing, itself, an atypically semi-comprehensive approach to CSR; mentions other fairly rare and emerging points like “transformative vehicle,” inclusive economic development, shared value, a values-basis; and adds the need to overcome gaps with stakeholder expectations. This shows there is a base to the concept, the field is evolving beyond it, but get the old problems fixed along the way or new efforts will be handicapped.

    This should serve the purpose to help explain to confused business practitioners what CSR is and some of where it might be heading.

    A problem with the Carroll quote, and it starts at the beginning, though, is contradictory to the “Where It’s Going” part of the title: “…pursuing maximum profitability as an economic responsibility.” While widely held conventional wisdom, it hides what might actually be happening at the cutting edge of CSR. When I looked at several examples of the latter, they seemed difficult to explain if Economics 101 concepts are actually motivating recent and surprisingly positive (to the point of startling) business actions. There actually might be a case (subject to, I hope, other researchers looking further into it, and open-minded observers and participants considering it) that moral motivations might be at play in places where you don’t expect it. Can there really be an emerging business conscience? Is it possible that some people in business (outside the explicitly values-driven companies) actually give a damn about society’s and the globe’s problems, and that might be effecting their actions? Almost no one has agreed with me to date.

    Here is the first of a three-parter I did last summer giving many examples to ponder:

    . “When It Really Isn’t Business as Usual: Can There be Principle Without ‘Principle?’: Part 1,”
    Sustainable Brands. http://www.sustainablebrands.com/news_and_views/stakeholder_trends_insights/matt_polsky/when_it_really_isn%E2%80%99t_business_usual_can_there?utm_source=newsletter&utm_medium=businessweekly&utm_campaign=jun15&mkt_tok=3RkMMJWWfF9wsRoks6XMZKXonjHpfsX56%2BotXa%2B2lMI%2F0ER3fOvrPUfGjI4FSMNjI%2BSLDwEYGJlv6SgFTrTBMbVxyLgOXxk%3D

    Parts 2 & 3 show other business actions that support this surprising premise.

    Is it time to re-look at the conventional wisdom?

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