Published: June 16, 2008
Column
CSR: Keep It Real
By Patricia J. Harned, Ph.D.,
President, ERC
Company A underwrites the symphony, pays for new playgrounds and picks up the tab for planting trees in the local park.
Company B supplies health care assistance for workers employed by its suppliers overseas, which helps improve their lives and increases productivity.
Which one is practicing “corporate social responsibility?”
By current definitions, the answer is both.
The debate over corporate social responsibility -- besides giving life to grad school dissertations – is a legitimate issue for company executives, investors, activists and regulators alike. Depending on who’s talking, “CSR” crops up in discussions from climate change to labor conditions, from globalization to the water supply. One CSR white paper asks, “Is It Time to Rewrite the Social Contract?”
(Paging Mr. Rousseau….)
It’s a seemingly simple do-good idea that provokes a surprising variety of strong opinions. Critics range from purists who believe the role of the corporation is to maximize returns to stockholders – period – to skeptics who see pricey CSR programs as smokescreens and distractions meant to paper over corporate misdeeds. Some see corporate “social responsibility” as a way of doing government’s job (and elbowing government out of the picture); others see CSR filling a need where government has failed to show up. Some crusaders want corporations to save the planet and fight for human rights, sensing that companies are the perfect allies: they have money and guilt.
Above it all, there’s often an unfortunate overlay of political correctness, faddishness and cosmetics. In 2005, according to the Harvard Business Review, “360 CSR-related shareholder resolutions were filed on issues ranging from labor conditions to global warming.” And as HBR notes, the number of corporate CSR reports, many of them glossy exercises in public relations, has exploded.
Despite all the ferment, there is plenty of reason to take CSR seriously and to think about how it might evolve in the most credible, constructive ways. Globalization and its competitive pressures are real. Responsible use of finite natural resources is a no-brainer. Brands can be battered by consumer attitudes about fairness and ethical conduct.
From the ethics perspective, it is worth asking whether business ethics and corporate social responsibility might be one and the same. I would argue that the answer is yes, if they both proceed from a company’s sense of its own integrity. Internally, the most ethical companies are those with both strong ethics programs and a healthy ethical culture in place. Externally, corporations that practice “real” CSR take a hard, objective look at opportunities to help themselves by helping others, in ways that fit their business and their core values. Many see this as a chance to address the social needs and problems that ultimately might hinder their business performance. Through old fashioned word of mouth, both are likely to affect a company’s brand for the better.
“A brand, a real brand, represents a connection - a rational and emotional connection between a company, its products and a customer,” said American Express CEO Kenneth Chenault to Georgetown University business school grads recently. “From the consumer's perspective, a brand creates an expectation. From the company's perspective it creates a promise.
“The strongest brands, the ones that resonate most with consumers, are those that stand for something; that have personal meaning for a consumer; and that reflect a commitment consistently fulfilled over time.
“Another important point to remember is that a brand is not what a CEO believes it to be ..... a brand is what the customer believes it is. Customers ultimately define brands. The power in this relationship rests in their hands, not mine.”
To use our example, Company B can improve its workers’ lives, increase productivity and communicate integrity and value to consumers with a good-faith effort at true corporate social responsibility. This is much closer to the mark than pretending to be “green” for PR purposes. Company A may be acting out of a sense of corporate integrity, but its impact on society is minimal and the return to the company is negligible.
In a persuasive article in the Harvard Business Review (“Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility”), authors Michael E. Porter and Mark R. Kramer advise business leaders to identify points where company and society affect each other and then look for ways to create “shared value.”
Apparently, Company B took their advice.