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Gregory Unruh

Gregory Unruh

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Why CSR Is Countercyclical

Posted: 05/16/11 05:12 PM ET

In early 2009 I submitted a blog post to Harvard Business Online with the following title "Surprise! Green is Countercyclical." It was rejected, probably because it sounded so far-fetched at the time. At the start of the '07-'08 recession, sustainability naysayers were having a field day. A poor economy meant green was dead. Financial Times columnist Stefan Stern caught the zeitgeist in his February '09 column when he wrote, "Thank goodness, now the recession's here we can forget all that nonsense about corporate social responsibility (CSR) and get back to trying to make some money." The logic was compelling. Devoting resources to environmental and social virtue at a time of losses made no sense. Many managers agreed.

I wasn't convinced, however, and began asking every company executive I knew whether the economic downturn was scuttling their sustainability strategy. Contrary to the logic, I had trouble finding companies dumping sustainability. Could sustainability be "countercyclical"? Despite a list of companies announcing sustainability initiatives in '08-'09, including AT&T, Disney, S.C. Johnson, IBM, Pepsi, Procter & Gamble, it was hard to prove a countercyclical hypothesis. Since that time there has been plenty of confirmation that sustainability didn't wither away in the recession. It gained momentum.

What has become clear is that there has been a bifurcation in the sustainable business space. In the downturn some companies cut back on CSR and sustainability efforts. They have become the laggards. Another group doubled down on sustainability. The best explanation for why they did so in a recession is that they have found out how to make sustainability pay. In other words, they have learned how to create ongoing business value from sustainability "virtue."

The risk now is for the laggards. If indeed sustainability pays and is now core to successful strategy, the first movers are gaining advantages every day.

 

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