Beyond corporate social responsibility

Dr Nicholas Ind
Partner, Equilibrium

THE EMERGENCE of Corporate Social Responsibility (CSR) has been both rapid and significant. Twenty years ago it was a subject of marginal interest to businesses, but now every organization of any size has a policy on CSR. The growth of CSR is a reflection of the continuing (although sometimes resisted) move to a stakeholder view of capitalism. Some well established businesses had long practiced this philosophy based on an understanding of the inter-connectedness of all their stakeholders; that social well-being, engaged employees, satisfied customers and suitably rewarded investors were inextricably linked. However, for many, CSR has been seen as more utilitarian: a sticking plaster that could heal a company’s reputation and improve its appeal. The challenge here is that in such organizations, CSR is a peripheral activity rather than core to business thinking.

Getting to the core
Organizations often see CSR as a tool to improve the legislative climate, enhance media attitudes and inspire current and potential employees. As a consequence, business television and newspapers are awash with advertising that makes claims for the social virtues and long-term perspectives of corporate brands. Yet most of the activities, while laudable in themselves, remain superficial. Scratch the surface and you find that CSR does not run very deep. When it comes to facing up to dilemmas about doing the right or the expedient thing, there is a temptation to take the easier option and satisfy the short-term needs of shareholders.
   Lorna Tilbian, Executive Director of the London-based bank Numis stresses that reputation-building is about being principled and having a long-term perspective—both of which are subject to pressures. She says, ‘Short-termism influences the managers of the company to cut corners to keep performing on a quarterly basis. The only test that really matters is the test of time.’
   For a business to really commit to CSR, it has to be truly integrated into strategic thinking. This seems to be easier for organizations which are not publicly owned. For example, the privately owned, outdoor sports clothing business, Patagonia, has a long-term perspective and a mission statement that says, ‘to use business to inspire and implement solutions to the environmental crisis.’ The ideal implied here has led the company to move out of businesses that it believes are environmentally damaging, to provide customers with a lifetime guarantee (on the basis it’s better to keep the product you have rather than buy a new one), to provide full traceability on all its products, to develop new materials that are recycled and recyclable and to support actively environmental causes. At Patagonia environmentalism is not an add-on—it permeates everything the company does and says.
   When the whole organization (and its customers) is engaged in adhering to a principle, then it creates a focus for decision-making and moves idea about CSR to the core. At Patagonia there is no CSR department as such, although there are individuals specifically concerned with looking at CSR based issues, rather every person from the receptionist (who developed a frisbee from recycled materials) to the designers (who are driven by environmentalism) delivers on the mission day-in, day-out. It’s part of the reason that Fortune magazine labelled Patagonia the coolest company on the planet.
   Similarly, the Dutch financial services’ group, Rabobank, which has 60,000 employees and 9·6 million customers, has long adhered to policies that are designed to connect it to all its stakeholders. This is not surprising given that it is a cooperative bank that is owned by its members. The continuous dialogue the bank enjoys with its customers and other stakeholders helps ensure it delivers on broader social needs as well as meeting its performance goals. As a symbol of this closeness and the integration of its audiences, anyone who is approved by the bank can visit its new headquarters and wander freely throughout the building.
   Both Rabobank and Patagonia are adept at balancing and integrating different stakeholder needs, but you have to search harder for publicly quoted businesses that deliver on this score. The requirement to deliver ever-increasing returns to shareholders tends to hinder a full-blooded commitment to CSR. We might, for example, look at the Norwegian oil company, Statoil, and its approach to extracting oil from the sands of Northern Alberta in Canada (a contentious issue) and argue that they have been socially responsible in consulting with communities and using sound extraction methods, but we could also counter that true social responsibility would argue against being there in the first place and avoiding the environmental damage.
   One business that has been trying to tackle the dilemma of competing interests, head-on, is Unilever. Last year, CEO Paul Polman stopped providing earnings guidance to investors, in an attempt to move the focus away from short-term returns. Seeing his mandate as more concerned with long term success, he also railed against hedge funds, when he said, ‘They would sell their grandmother if they could make money. They are not people who are there in the long-term interests of the company.’
   Unilever has been integrating its approach to sustainability across its brand portfolio, focusing on renewable resources (such that all the palm oil it sources will be from renewable supplies by 2015) and thinking about the implications not only of the act of purchase but also the use of product.
   Unilever has 400 brands that are used 2 billion times a day around the planet, with about 70 per cent of the greenhouse gas imprint occurring during use. Encouraging sensible and environmentally responsible use of products, therefore, can have a big impact. As Santiago Gowland, VP of Brand & Global Corporate Responsibility, argues, ‘Marketers, with their expertise in innovation and behaviour change, can, and should, be making a significant contribution towards societal goals by enabling consumers to make more conscious choices and encouraging people to adopt conscientious consumption habits.’

Conscientious brands
At the Medinge Group, our annual awards, known as Brands with a Conscience tries to uncover and reward organizations that have integrated corporate responsibility into the core of their thinking: brands such as One Water, that exist to give all their profits away to water projects in Africa, the Swiss private bank, Pictet et Cie that demonstrates a long term perspective and a commitment to environmentalism and Merci, the Paris-based lifestyle retailer whose very existence is based on the idea of improving the lives of people in Madagascar. These brands are all genuinely people-focused and reap benefits in terms of highly motivated employees, committed customers and supportive communities. The interesting challenge is to see whether more businesses (especially larger organizations that can have a significant impact) can fully integrate CSR and become truly conscientious.

Nicholas IndBeyond corporate social responsibility

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