Corporate Social Responsibility -- Bandwagon or Built-in?

There is a lot of noise these days around Corporate Social Responsibility (CSR) with some saying it's long overdue and others saying it's really just "greenwashing." Moreover, trust in corporations is at near-record lows so there is plenty of incentive for business leaders to jump in.

There is a right way but, just as importantly, also a wrong way to jump. I've been watching and collaborating with folks in the corporate sustainability world for some time, and I think it is important to put some context into how this can and must work, and when it doesn't.

Two Kinds of Corporate Players: The first are companies whose very offering comes with high social good built in. Examples of this are BigBelly (solar powered municipal trash dumpsters), Bright Horizons (child day care centers), Zipcar (car sharing), and my own BiddingForGood (online fundraising auctions). The very nature of what these companies do is for a better society.

The second category is companies whose product has nothing to do with sustainability or social good (and in fact can sometimes go in the opposite direction) but who are trying to build sustainability and responsible corporate citizenry into their DNA.

The Problem: The problems start when, as one academic said to me, "The CEO hasn't drunk the Kool-Aid" and considerations for shareholders and senior management dominate over customers and employees. Far too many companies have set up CSR initiatives simply to provide some window dressing or PR to their corporate story. I recall one CSR manager from a nationally known outdoor clothing company telling me she had never met her CEO, there was virtually no internal support for her work, and the bulk of her activity was PR-driven. Contrast that with Patagonia, whose founding CEO Yvon Chouinard has espoused his vision for a sustainable planet since the day he started the company. Every decision made at Patagonia is made with an eye toward sustainability.

The problem gets more complicated because there is much research showing that consumers favor brands that show social responsibility. So the temptation to greenwash is real and brands do the logical thing and try to ride the bandwagon. In my own space, there are any number of companies who are trying to drive incremental sales by tying themselves to a pink ribbon or a Red campaign. The percentage of revenue actually going to good works is usually pretty small (less than 5 percent) but in most cases it works. Or does it? What happens when inquiring journalists "out" the fakers? We end up with a more cynical citizenry.

Educated Consumers and Educated CEOs: They key to ensuring that companies become increasingly sustainable in an authentic way is talking about it and letting companies (especially their CEOs) know that you care. Key to sleuthing out the fakes from the real deal is a vigilant press and an educated consumer who has a healthy bit of skepticism. The more CEOs educated on the virtues of CSR (and there are many practical bottom line benefits like motivated employees, reduced supply chain costs, and loyal customers), the more they will rationally drink the Kool-Aid. But it starts from the bottom up with citizens letting companies and CEOs know that this matters and they will take their business to brands that are showing they are responsible in how they treat employees, their commitment to their own local communities, and making sure their supply chain and corporate footprint factors in sustainability.

The key is to continue to have the discussion, for citizens to engage, use their social networks and if they see bad behavior to alert the press and to write to the CEO to let them know they are being watched.

 

Follow Jon Carson on Twitter: www.twitter.com/JonCarsonB4G

Comments

[addisonsteele]

06:16 PM on 03/29/2012

At one time, many large corporations subscribed wholeheartedly with the idea of social responsibility. During the 1950s, the CEO of General Electric gave a speech in which he discussed the company's responsibilities to its shareholders, its employees, its customers, and the communities in which it operated. This is what was known as "stakeholder capitalism." "Shareholder capitalism," in which the highest duty of the company is to increase the value of shares, is an invention of the 1970s, by the same economists who were starting to complain about regulation and to argue that cutting taxes, especially for the rich, would stimulate the economy, such as Milton Friedman. Of course, those economists were being paid by wealthy Social Darwinists (they call them libertarians today, but they are the same thing) to create these theories.

[humanbeing-rick]

12:17 PM on 03/29/2012

Very good article on a very important topic, CSR. It is a new name for the kind of ethical behavior we expect from our corporations. The bottom line is that corporate America has been misbehaving, and has abused it's power and privileges.
"trust in corporations is at near-record lows so there is plenty of incentive for business leaders to jump in" -- Exactly, there is no trust left. Many feel we should just revoke the corporate charters of the bad actors, who do not benefit our society.
Business leaders should have great incentive to show true CSR, and patriotism for our own country.

[John Friedman]

11:56 AM on 03/29/2012

Sustainability, my preferred term, is more than 'greenwashing' or reducing profits for the sake of appearances. In fact, a responsible long-term strategy that enables companies to build successful businesses over time, sustainability is a recognition (long overdue) that the impacts a corporation has on people, the planet and prosperity go far beyond the goods and services it produces and provides. In fact, when companies recognize that empowered and engaged employees are more productive, easier to recruit and more likely to be retained, they see treating them with respect, dignity and providing a positive work experience is a business enhancing strategy. When companies recognize that customer loyalty is based on customer experience, far more than slick advertising or marketing, they work to build relationships rather than viewing them as transactions. When they recognize that community goodwill is essential to facilitate permitting, zoning and approvals for construction, they see the value of being a good neighbor. And, when they learn the consequences of environmental disasters, financial misdeeds and failing to ensure that their supply chains reflect their values, they recognize that environmental stewardship, ethics and governance are critical to the long term viability of their operations.

And when the majority of shareholders are buy-and-hold institutional investors, long term viability (sustainability) is a sound strategy for enhancing shareholder value as well.

[Genders]

10:16 PM on 03/28/2012

It's the wrong avenue for doing good.

The laws require maximizing shareholder value, not helping society.

Let's change those laws first.

But corporations will always be biased toward profit above all else.

Even "good" companies feel pressure to make more money and less "good".

Because of privacy, the consumers cannot know what evil the corporations are doing till long after it's too late, if ever.

Our democratic Republic is the correct avenue, but we have to take it back from big corporations.

Vote for the Kucinich, Warren, Grayson cpc progressives int eh primaries and the dems in the general.

[Canadian Looking In]

09:11 PM on 03/28/2012

One of the problems with today's corporate mentality is the focus on shareholders - at the expense of their customers. Producing junk in China may make money for the shareholders but consumers are getting fed up with this model.

Get back to making what the customer wants and proving that you're invested in the community and the money will follow.