By: Joe Lawless
What is corporate social responsibility and why should any business care about it? Corporations have been debating about social responsibility since the 1950s. What has changed in the intervening 60 years is consumers’ access to information – the good, the bad and the ugly. Good information about the noble acts of firms and employees is streaming daily into our social networking accounts through our smart phones. The information has an effect on how we feel about brands and how we behave in response to that feeling.
Bad or even ugly information about environmental, social or governance practices can spread instantaneously and dissolve years of goodwill and brand reputation on the spot. That is why business should care. Because socially responsible business is good business. Investing in corporate reputation is paying big dividends, and by the way, the environment, your community, your employees and the world thank you.
This week the Milgard School of Business – University of Washington Tacoma and top companies like REI, Microsoft, Holland America, among others will be discussing these and other issues at a conference titled “Reputation and Integrity in an Information Age.” Why? Because reputation and integrity matter to consumers and investors – more so now than ever before. Because the market rewards firms that they believe align well with their values, and they punish those that don’t.
To create a positive alignment, firms need to live their values through their actions. You can’t fake values – they are at the core of every organization and show in everything you do. Authenticity and transparency are the new “big thing” in business. Authenticity because you can’t fake this stuff – you are either the real deal or your competition will be. Transparency because opacity and ambiguity just don’t cut it anymore. The recession hit the US in 2008 due to questionable behavior on the part of many players and as a result, your stakeholders have become much more demanding that you be transparent – and rightly so. They are asking tougher questions and are demanding honesty and transparency in what you do and what you say.
Funny, isn’t it, how such simple concepts (authenticity and transparency) can create such value?
The debate about business and social responsibility is really a false debate. It assumes an either/or position that doesn’t exist. Business can be both profitable and socially responsible. This new age of free-flowing information is actually bringing about a reverse paradigm where those who are not socially responsible will not be profitable. The old, worn-out argument is that the only purpose of a business is to create value for its shareholders. This is the false argument: that profit maximization and social responsibility are mutually exclusive. They aren’t.
The lifeline of corporate social responsibility has seemed to follow the romantic development of a love interest. We started in an age of corporate philanthropy where companies tried to get attention and impress consumers with their largess in order to win devotion. We have moved through strategic philanthropy where firms were more intentional with their giving, more focused and more demanding that there be a return on that “investment.” We have landed in an era of social responsibility, transparency and accountability. Hopefully because we have evolved, but more likely because of the easy access to information. Our romantic interests (the consumers) now know everything about us, and we can’t fake it with a photo from 20 years and 20 pounds ago.
If companies want to create true ties with their stakeholders that are based upon their values, they need to be more mature, more honest and more transparent in order to create lasting value.
Reputation, integrity, values, transparency, stakeholder engagement, leadership are all key issues that businesses need to pay attention too. My hope is that these discussions give us a better understanding of where market expectations are going, how to create value by leveraging your values, and why you need to pay attention to these things. The availability of information has created a shift in consumer expectations around corporate behavior, we need to be mindful of these shifts and build upon ideas for how to truly create shared value.
Joe Lawless, Executive Director
Center for Leadership & Social Responsibility