CSR has never been higher on the corporate agenda.
A recent World Economic Forum report observed that the three key pressures of corporate competitiveness, corporate governance and corporate citizenship “will play a crucial role in shaping the agenda for business leaders in the coming decade”. N Craig Smith looks at how companies can present a convincing business case for CSR in an increasingly distrustful, demanding environment.
Against a background of anti- globalisation and mistrust of big business, there is growing pressure on business leaders and their companies to deliver wider societal value.
But companies are caught in a moral trap. Customers want their companies to be responsible, but don’t want to pay premiums. They are suspicious of companies that wear their hearts on their sleeves, thinking that they are only committing to CSR because it looks good. But they’ll also vote with their feet and boycott companies that aren’t perceived to be doing the right thing. How do companies reconcile this conflict?
First, companies need to be aware of the difference between the normative case, where companies commit to CSR from a desire to do good – and the business case, where firms engage in CSR to reflect enlightened self-interest. Most companies, whether they admit it or not, probably undertake CSR initiatives from a mixture of these two motivations.
The company also needs to be aware that while there is substantial agreement that CSR is concerned with the obligations of business to society and the wider world, there is much less certainty about the nature and scope of these obligations.
Even today’s corporate champions of CSR, such as Starbucks, meet with criticism from non-governmental organisations and others. Perhaps the first key consideration for any company undertaking CSR is not to expect an easy ride.
The calls for CSR today are more broadly expressed, more specific and more urgent than they were in the 1970s and 1980s. They emerge from business associations with the express purpose of promoting CSR (e.g. WBCSD, LBSR, IBLF) as well as general business associations. They also come from governmental organisations such as the DTI. Often, these calls include concrete recommendations for action, such as CSR audits and stakeholder engagement.
The urgency stems from a realisation that the criticism of business is more far-reaching than ever before. This is in part because business itself is more pervasive and more powerful. The extent of this criticism is evidenced by protests at global meetings of the World Trade Organisation since the Seattle conflict of 1999, as well as actions targeting individual firms. Moreover, the demands for greater social responsibility are now emerging from mainstream quarters of society – not just protesters at global meetings.
The private sector is increasingly called upon to address social problems and, accordingly, shoulder greater social responsibilities. This is in addition to righting the wrongs for which it is more directly responsible, such as pollution or product safety. As a result, the CSR responses of individual firms are more widespread and more substantive than in the past. Most large corporations now claim a commitment to CSR. In many cases their initiatives go substantially beyond corporate philanthropy and communications designed to defend the firm’s societal impacts.
Certainly, CSR is no longer restricted to smaller firms that champion CSR in line with social enterprise goals, such as The Body Shop or Ben and Jerry’s. Even corporate critic, Naomi Klein, talks of a massive shift in a more socially responsible direction by many multinationals, though she views the response as haphazard and inadequate. The impression overall is that the debate on CSR has shifted. It is no longer about whether to make substantial commitments to CSR – but about how?
This raises a number of substantive questions. How can companies make a substantial commitment to CSR? More specifically, is there a requirement for some firms to make a greater commitment to CSR than others?
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