If I drew one conclusion after sitting with 100 CSR executives and practitioners, it would be that CSR has transformed into a material issue for companies and stakeholders alike. What was looked once at mostly as ‘nice to have’ has become key for companies as they start realizing the magnitude of the transformational challenges they face.
This theme came up again and again at the Responsible Business Summit that took place in New York two weeks ago. In addition, it was interesting to learn about some of the trends that shape the CSR space from the people that actually practice it every day.
Here are five of them (not including CSR reporting, which will be discussed in a separate article):
1. Companies collaborate on CSR – companies just can’t do it all alone when it comes to CSR. There’s nothing new about that, but it was interesting to see how collaborations dominate the CSR field, not just with NGOs and other stakeholders, but also between companies. Mitch Jackson, Vice President Environmental Affairs and Sustainability at FedEx explained that industry collaboration is enviable given the issues companies deal with. Still, how you balance collaboration and competition? Jackson gave an example about the work FedEx did with EDF to develop hybrid delivery trucks. When FedEx was asked why the technology is non-proprietary, the reply was that first, they couldn’t alone transform the industry and second, that the hybrid electric vehicle is not the competitive advantage for FedEx, it is the driver of the vehicle.
2. Going more upstream, less downstream – it is becoming more obvious that companies are mainly focusing their CSR efforts on their relationships with their suppliers and their operations rather than on what happens after the products reach the shelves. There are relatively very few companies that try to change customer behavior or provide better options for products’ end of life. With regards to the latter, Kindley Walsh Lawlor, VP Social and Environmental Responsibility at Gap, mentioned some initiatives Gap had like collection bins for used jeans in the stores, which were then shredded and used for insulation in houses built by Habitat for Humanity.
It looks like companies have difficult time finding the right way to deal with the downstream and also feel they have more leverage when it comes to working with the supply chain. At the same time, it’s also clear that the downstream is going to be the next biggest challenge.
3. Shared value opportunities in health care – Health care has become a hot CSR topic, especially among IT and telecom companies looking for opportunities to make health care smarter. These opportunities fit well with the shared value model as they generate important social benefits, mostly in developing countries. Chris Librie, Director for Environmental and Health Initiatives at HP talked about HP’s focus on global health, “improving access, quality and efficiency in the health care through technology.” One example he gave was an early HIV diagnosis program the company is running in Kenya in conjunction with the Clinton Health Care Initiative, leveraging the mobile technology in Kenya to speed the diagnosis of HIV in infants.
Even with such a life-saving program, the business case matters (otherwise it would be more of philanthropy and less of shared value, right?). HP is monitoring such programs to identify their business impact – does it help the company to improve its reputation or does it lead to business deals? In the case of the program in Kenya, Librie said that it led to discussions with the Kenyan Government about potentially building the health cloud for the country. He added that HP couldn’t pursue such programs if they didn’t have both the social and business benefits.
4. CSR adds to company’s value – can CSR increase company’s value? While a growing weight of evidence suggests positive relationships between CSR and financial performance it’s still an open question, so it was interesting to hear from Mark Newton, Vice President Corporate Responsibility at Timberland. Newton first said that he doesn’t believe companies should pay a premium for buying a company with CSR, but it certainly should be part of the valuation.
He said that when VF bought Timberland “the conversation on the street” was about three things: Timberland is a very healthy brand, the company’s bigger market share outside the U.S. which complements VF and the fact that it brings a footwear competence into an apparel company, and finally Timberland’s CSR expertise. So, he added, that if your CSR is more than just a cost savings program and it builds your brand, it will be taken into account.
5. Engaging CFOs smartly – getting the CFO on your side is still one of the biggest challenges of CSR executives. Clear business case for CSR certainly helps, but smart tactics can help as well. One example is having the request coming from the CEO, like in the case of integrated reporting at Verizon.
Another example was from HP’s Librie – partner with other people within the organization that will help you to make the case, like sales people that their customers care about sustainability and find it a way to engage them. The final piece of advice came from Kathryn Brown, SVP Public Policy Development and Corporate Responsibility at Verizon who said: “We can’t be the soft people of the company.”
Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Business School, CUNY and the New School, teaching courses in green business and new product development.