Will Corporate Social Responsibility Adapt or Die?

Marc StoiberI recently launched a book that mapped out the disruptive global trends today’s companies needed to futureproof themselves against. The book in turn launched a stream of conversations, each person describing yet another sector, company or movement in need of futureproofing.

I did not, however, expect Corporate Social Responsibility (CSR), itself a force disrupting the status quo of business, to be added to the list.

It was Wayne Dunn, Professor of Practice in CSR at McGill and President of the CSR Training Institute, who first described CSR’s ailment to me. In his words:

CSR is often somewhat ghettoized inside corporations, off playing in a sandbox of its own at the margins of the business.

Much of the reason for this is that the CSR professionals (myself included) have not done a good job of helping corporate divisions like Finance, Engineering, Operations, R&D, etc. to understand why CSR is important for them.

 Recent research lent credence to Dunn’s assertion, underlining that all was not well in the CSR camp.  Despite widespread adoption of CSR in business, little meaningful progress has been made across a range of metrics. Greenhouse gas emissions, for example, have grown nearly twice as fast over the past decade as compared to the past 30 years.

We’ve seen enough case studies to know that CSR makes financial, as well as social and environmental sense. We also know that not adopting CSR will ultimately lead to business disaster.

So why isn’t CSR working? The obvious answer is that our current business model isn’t conducive to creating the radical change that’s needed to restore our planet’s health.

As Michael Townsend writes

…if maximizing profit is our primary purpose, then everything else will be subservient to this aim. We can, perhaps, seek to optimize the returns we make while delivering a balanced range of environmental and societal impacts, but it is highly unlikely we can aim to maximize profits at the same time. We cannot serve two masters. In this framing, CSR only ever can be an adjunct to the main purpose of the business.

If that’s the case (and I believe it is), CSR will continue to be treated like risk management window dressing, creating little more than shiny reports to assuage shareholders. It will remain marginalized, and eventually die the quiet death of a failed experiment.

Evolution through innovation.

Peter Bakker, president of the World Business Council for Sustainable Development, described the demise of CSR in his talk at the Sustainability Science Congress in Copenhagen. However, his key argument was that leading companies are going beyond CSR by integrating sustainability into everything they do. Witness Nike’s Considered Design and Unilever’s Sustainable Living Plan. In short, the old-school concept of sustainability as risk management is being usurped by the idea of sustainability as innovation.

This model makes sense for two reasons.

First, innovators thrive on constraint. As ad legend David Ogilvy said “Give me the freedom of a tight brief.” Being forced to design a car that goes further on less gas or packaging that biodegrades not only provides focus, but spurs original thinking.

Second, eco-innovation creates a culture that eco-responsibility can’t match. We may not be able to steer companies by the old ‘profit at all costs’ ethos anymore, but as the failed experiment of CSR has shown, we can’t expect business to adopt responsibility if there is no reward. Innovation provides that reward.

So is CSR doomed? Yes. But if innovation is what steps into its shoes, we shouldn’t be grieving its passing.

Marc Stoiber

11 responses

  1. I get the point, I really do. But lets be careful NOT to scare away well-intentioned companies that want to join the CSR movement, but are afraid that they can’t do enough (typically smaller, resource-strapped businesses). I’m researching the issue locally and mostly what I hear is a) how do we begin? and b) are modest contributions really going to matter? Small businesses are responsible for 54% of US revenues and 55% of US jobs. The cumulate impact of the small business sector can be enormous. Your point is valid, I’m just asking that we don’t turn off potential recruits.

    1. Point well taken.

      I had no intention of dissuading people from making a difference. But the current model of CSR needs to adapt and evolve. Otherwise it will become irrelevant as it is bypassed by other, more innovative solutions.

      I’d love to write about more companies that are adopting CSR in a way that’s blowing minds and winning wholesale support. If you have stories like that, please send them to me and I’ll make sure they get written about!

      Cheers,

      M

  2. Congrats on the book and thanks (as always) for your original thinking. As you know, I’m one of your biggest fans!
    However, I hope you will allow me to introduce a few facts from CSRHub’s database into this discussion.
    A. Many more companies capture/track information about their social performance now than did five or ten years ago. We recently studied 18,000 companies from 14 different countries. Almost 70% are reporting on at least one of the twelve measures of sustainability that we track.
    B. You chose corporate carbon production as an example of where CSR has failed. However, this is probably the best example of success. Look at measures from NGOs such as CDP and the EIO, SRI sources such as Trucost, EIRIS, Vigeo, Thomson, or MSCI, or supply chain metrics from EcoVadis, TSC, CSRware, Enablon, or OneReport. All of them show huge reductions (>50% in most cases) in corporate carbon use over the past five years. Performance improvement is spottier in other areas, but today’s corporation is more diverse, less resource intensive, better governed, and more responsive to its community than it has ever been. This is true not only in the US and Europe but also across the 13,700 companies we track in 127 countries.
    C. Recent research (including work we’ve done) has tied CSR performance to things such as brand strength, reputation strength, lower interest rates, and more stable profit margins. Given how early we are in the history of measuring sustainability performance (few solid data sets go back more than 8 or 10 years), we have a remarkable amount of fact-based evidence that CSR is an important part of making companies more successful. Add anecdotal evidence to this and I believe most senior corporate managers would say it is important to improve their company’s social performance.
    While I’ve disagreed with some of your facts, I agree with the opinion that CSR professionals have done a poor job of making their work important to other parts of their company. They need better tools, more research, and stiffer backbones! They need to take credit for the value they have been creating and demand that their goals be included within their corporation’s broader goals and culture.

    You may be correct that a few “advanced” companies have gotten to the point where they have run out of new CSR initiatives. For these few leaders, innovation into new areas is the only way to move forward. However, there are tens of thousands of companies who are only starting their journey towards a more sustainable future. Let’s get the 69% of the 70% I mentioned above to the “awareness” level of Nike, motivate the other 30% of larger companies who haven’t done anything to get started, and get government entities, NGOs, and private companies to start thinking about and reporting their social performance. We can then shift our energy into innovating and looking for new things to do.

  3. I was pleased to see the CSRhub comment and the push-back about what the data are showing. I am passionate about metrics and concerned that while our modern world has a huge amount of data, there is rather little opinion that is driven by data, but rather by what is trending somewhere in the twittersphere or blogosphere,

    My own experience is that corporate social responsibility (CSR) is actually flourishing, though many of the departments doing CSR and the staff of these departments may have actually been downsized or eliminated. I don’t look for labels but for activities, and the activities needed for true corporate responsibility has increased significantly over the past few years.

    I want to see metrics about corporate performance that are truly about the triple bottom line … PROFIT, PEOPLE, PLANET … but I actually want more than this. There is a dangerous assumption that the business organization become more responsible will result in a better society and environment, but this assumption may well be fatally flawed. The challenge is for people to have a better quality of life and for the planet to be under less stress and for the business organization to be helping to achieving this result. Profit for owners is secondary in the bigger scheme of things, NOT primary.

    And the good news is that a growing number of CEOs understand this.

    The bad news is that the CFOs do not have a rigorous easy tool to communicate this to investors using numbers that are widely accepted and understandable.

    Exciting times

  4. A similar study to the one mentioned, by the UN Global Compact referred to CEO’s stating their CSR efforts had plateaued due to insufficient return on investment. It stated that increased legislation will lift the bar on competitive advantage and further drive sustainability programmes beyond just initial pilot schemes.

  5. Thanks for the article Marc, however I have to disagree with your remark that CSR is doomed. CSR practices have been an the rise for a long time. The developments and participation in new market funds and indices solely dedicated to SRIs indicate this is not only a trend but actual practices that constitute a game changer for future businesses. Sure CSR have hit stagnation but is due to the bad economic landscape we all face. Unfurtunately, CSR is viewed as an investment rather than as a operational path to catapult innovation and new businesses. This is one of the reason why it is not perceived as cost-effective. Indeed we have failed to integrate CSR as a main driver in the business cycle. CSR engagement must be prioritized in every department rather than be a part of a secondary objective. To do this internal controls should be in place to make of CSR practices an operational standard rather than a transformational goal.

  6. I get that making statements like: “CSR is dead” get attention but the only thing that’s dying is the terminology. CSR, once the term du jour, no longer encapsulates the breadth of work going on and the maturation of the field. As with any new discipline, the more we do, the more we learn, the better we become. Such is the case with CSR. It has operated on the sidelines because we didn’t know very much about it and didn’t really care. This is no longer the case.There are many great examples out there today that speak to how best to leverage social and environmental progress for business benefit and we need to keep sharing them. In the short-term, we are stuck with constantly evolving nomenclature that attempts to capture all of this expansive change for the better (sustainability, triple bottom line, purpose, shared values, etc. etc.) But in the long term, I expect (read: hope) the terminology will be unnecessary as we will end up with a critical mass of B Corps dominating the marketplace and changing the face of business for ever.

  7. While you may be right about the death of CSR as a term, social impact itself will evolve. The term CSR was always doomed as a title or concept. Think about it. The idea of ‘Responsibility’ is an externally imposed value, a ‘should’. If social impact is to succeed in business, it must go through the same process as marketing did. That is to move from a departmental idea to something that is infused throughout the company.

    The social aspect of the company’s brand must be central in what it believes from the inside out, not imposed from external sources. But more importantly to these companies, they need to be able to ‘make hay’ on it. That is there must be extrinsic rewards for doing the right thing. So while they make a difference, it needs to be directly connected to an interested audience who support the business with it’s mission. This market-led approach is essential. The customers must want social impact of different types and companies need to align themselves with the right market, ensuring there is a good company-to-cause fit.

    Two other factors will foster social impact and help to bring it to centre-stage in the business world. The first we have already mentioned, customers, who are the business’s biggest influencers. Let’s look at the second: Investors. As long as a company’s investors are single bottom line focussed, so too will the company be. Director’s bonuses will be directly linked to ‘maximising profits’, so as you point out that is game over for CSR. However If customers begin to flock to new businesses that embrace social impact, who in turn are backed financially by social investors or crowd-funders (which also is going to be transformed), then the single bottom liners will have to think again.

    The bottom line (triple of course ;) ) is that if you want change, you have to work with the businesses, customers and investors who already embrace change and you work with them (…light a candle). As the adoption curve rises to the 13% tipping point, others will see opportunities in social impact and join in the revolution. The key is in ensuring that companies are rewarded for their social efforts and that they own it. Otherwise it will be just CSR, a derelict ghetto in business. Let’s not let that happen.

  8. This is a very pertinent, insightful and though provoking article! I am very much interested in the views that individuals have regarding the value of CSR within organisations today. As such I have focused my final year university dissertation on this issue. Specifically, I am investigating the important of corporate social responsibility and ethical business on the performance of an organisation. Via a questionnaire, I am exploring business professionals’ views on the discussion. I would find anyone who is interested and opinionated on the debate to complete my questionnaire as your response will be invaluable to informing my research.

    Please find the link below:

    http://kwiksurveys.com/s.asp?sid=qdizxhghr9imwo5494100

  9. Thanks for triggering this fruitful discussion, Yes, CSR as an isolate and unilateral exercise is dying. However, organizations capable to:
    a. Magnify the “R” and link the responsibility in CSR with the responsibility of business to respect the law and be diligent and
    b. expand the “S” towards human rights in the work place and in the communities where they operate, paying particular attention to indirect adverse impacts.
    These organizations will be able to make a meaningful change in the model. CSR 2.0 must be humanised, diligent and able to connect the dots.
    Exciting times indeed!

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