Doing Away with Corporate Social Responsibility | Sustainable Business Forum

Maybe it’s time to do away with corporate social responsibility (CSR).

Not merely the words and the idea but the infrastructure: CSR departments, CSR reports, CSR conferences and CSR executives.

And, as long as we’re at it, let’s think about ditching the triple bottom line, the pursuit of shared value, corporate citizenship and especially, yuk, the idea that stakeholders deserve a say in how to run a business.

All of these are, at best, distractions and, at worst, ways of thinking about business that create a separation between a company’s core business and its impact on the world. Both ought to be life-enhancing. No more and no less.

I’ve been thinking about CSR and how to talk about it for years.  I wrote my first article on corporate responsibility for FORTUNE in 2003. It ran under an odd headline — Tree Huggers, Soy Lovers and Profits — because my editors knew that  words like corporate social responsibility turn off readers. I grappled with the meaning and terminology of CSR again in my 2004 book, Faith and Fortune, which explored connections between religion, faith, values, spirituality and business. The language of faith and values, I subsequently decided, wasn’t the best one to use when speaking to corporate executives about business and its impact. I’m now inclined to talk about sustainability. For all its vagueness, corporate sustainability is an idea that is both practical–no one wants to kill their company–and radical, because no company  is truly sustainable, at least as defined by the Bruntland Commission as promoting development in a way that “meets the needs of the present without compromising the ability of future generations to meet their needs.”

But the here goes beyond language. I was reminded of that when reading an excellent new book by Carol Sanford called The Responsible Business: Reimagining Sustainability and Success (Jossey-Bass, 2011). No, I don’t love the title or even her terminology. (One chapter is  called, yikes, “Stakeholders as Systemic Collaborators.”) But Carol’s arguments and insights (and the title wasn’t her idea). Carol argues that the most successful and profitable businesses, over time, will not be those that “practice CSR” but instead those that rethink their purpose, reorganize themselves to draw upon the creativity and passion of all, and integrate responsible behavior into the way they do everything they do.

As Carol writes:

Responsibility isn’t a set of metrics to be tracked or behaviors to be modified. It is central to both the purpose and prosperity of a business and must be pervasive in its practices.

This may sound obvious but it leads her (and her readers) to new ways of thinking about business. Businesses, she says, should strive not just to minimize the harm they do, but to do good, to become restorative, to “improve and evolve healthy systems.” She explains: 

Ecological and biological systems not only adapt to their surroundings, they also transform them. They create contexts in which increasingly sophisticated networks of relationships emerge…

Corporations, and the businesses within them, work more or less the same way. If they are to live and prosper, they find ways to remain connected to their origins while cultivating and then adapting to changes in the world around them. Their long-term viability has as much to do with how well they create networks of relationships [emphasis added] with consumers and other companies and industries that advance the health of all.

Yes! Here’s how I think about this:

The old/traditional/assembly-line way of doing business was fundamentally transactional. Business was seen as a set of discrete win-lose transactions with customers, employees and suppliers. Companies created value by paying their employees as little as possible, paying their suppliers as little as possible, charging their customers as much as possible and externalizing their costs.

The new/progressive/responsible/sustainable business is fundamentally about relationships. This company sees itself as the center of a network of long-term, win-win relationships with workers, customers, suppliers and communities. The company’s value lies in its ability to strengthen and enhance all of those relationships.

This new way of thinking and behaving can’t be left to the CSR department, the chief sustainability officer or anyone else. It’s the job of the CEO, the CFO, the COO, the CMO, the head of sales, the factory foreman, product designers, everyone.

With a focus on CSR, “you get officers, you get programs, you get incentives,” Carol told me when we spoke by phone. “If you are given a target that you are to achieve, people focus on the target and the processes.” Instead, people need to feel free to express their highest values and beliefs at work. “Humans are most alive, and most creative and innovative when something comes out of them as a person,” she says. A company should be “more like a jazz quartet and less like a conducted symphony.”

Nor does “embedding sustainability” into the business do the trick, Carol told me. Sustainability to what end? Recently,  I had an opportunity to give a paid speech about sustainability to suppliers of a big tobacco company. Uh, no.

Carol has corporate experience to back up her thinking. She’s been a business consultant since 1980, working for such companies as DuPont, Colgate, Seventh Generation and the Kingsford Charcoal unit of Clorox.

She tells revealing stories in the book.

A Kingsford Charcoal executive leads a transformation of the company by developing the skills of the company’s workers and encouraging them to think like business owners; he dissolved departmental boundaries, invited everyone to put themselves in the shoes of a customer, and to see the contribution that their work makes to other people’s lives.  He helped them connect their work to a bigger purpose.

In South Africa during the turbulent 1990s, a Colgate leader shook up the workforce by persuading whites to work for blacks, and getting everyone to come together to address issues in both the business and the community.

At DuPont, a middle manager looking for an alternative to Freon, which was co
ntributing to ozone destruction, gets help from throughout the company, from customers and, unexpectedly, from Greenpeace.

None of that could have been accomplished by a CSR executive or department–or any department. “The biggest challenge for a company that aspires to be a responsibility business,” Carol says, “is to stop working on parts and start recognizing and working on whole systems.”

CSR “can’t be bolted on but must be built in,” she says.

Business is too important to be left to CSR departments. It’s also too important to be left to business alone.

Pressures on business to become life-enhancing must come from without as well as from within–from customers, from rank-and-file workers, from engaged shareholders, from activist groups and, gently, from governments. If we find ways to hold businesses accountable for what they do, smart businesses will adapt and meet our rising expectations. Others will die.

It’s not a lot more complicated than that.

Business managers should focus on generating long-term value for their shareholders.

They should lead their companies in ways that enable human flourishing.

That’s the purpose of business in a phrase, a wise man once told me, and he wasn’t a CSR officer.

As Carol writes: “I can hardly wait for the corporate responsibility movement to run its course so that businesses can get back to being responsible by nature.”

Me, too.

via sustainablebusinessforum.com

 

Raising the Bar on CSR | Philanthrocapitalism

Can and should companies be in the business of doing good? This long-running debate was graced earlier this year by a new contribution from Michael Porter, one of the world’s leading management gurus, and his sometime sidekick, philanthropy consultant Mark Kramer. In a headline article in the Harvard Business Review they both took a swipe at traditional corporate social responsibility and proposed a new framework, which they called ‘shared value’. Get the do-gooding out of your PR departments and corporate foundations, they cried, and instead mobilise the whole of your business to find the win-win where what is good for society is also good for the bottom line.

This offering was greeted with enthusiasm in some quarters, such as the World Economic Forum in Davos, yet also encountered some scepticism, both on the grounds that the idea is not particularly novel and that it may not mean anything. So it was with interest that we read a feature in the current edition of the always excellent Stanford Social Innovation Review in which Mr Kramer engaged in what was billed as a “candid” discussion of shared value with the representatives of ten major global corporations.

Do businesses recognise shared value as the next big idea? Well, the corporate folk gathered by Mr Kramer seemed to be lapping it up. Executives from a diverse range of businesses from money transfer giant Western Union to IT powerhouse Cisco happily described how their do-gooding slotted into the shared value worldview. And why not? It’s always nice to be part of the newest big idea.

Yet amid this love-in for shared value there was one jarring note. “I’m probably the only person at the table who’s not part of a corporate affairs organization or a foundation”, observed Beth Schmitt, the director of recycling for North America at metals behemoth Alcoa. Well spotted. That shared value, which is supposed to be at the heart of the business and at odds with traditional CSR, was being celebrated largely by CSR and PR people rather than core business executives strikes us as somewhat contradictory. 

This matters because tough questions do need to be asked about the role of business in society. Take the iconic mega-bank Goldman Sachs, for example, which hosted the roundtable discussion and showcased its 10,000 women project and 10,000 businesses initiative (for which Mr Porter co-chairs the advisory board, alongside Warren Buffett ad Goldman CEO Lloyd Blankfein) at the meeting. These are, in our view, good examples of smart, high-leverage corporate philanthropy. Yet, as we argued recently, such projects remain at the margin of Goldman’s business and do nothing to address bigger questions about whether Goldman’s core activity is actually socially useful.

Was the selection of participants at the roundtable actually a tacit admission that even those firms which most fervently champion shared value are really not doing much that wouldn’t qualify as traditional CSR?

“The vast majority of acivity in this area [CSR] is seen as separate from the business,” Mr Porter told a meeting of the Committee for Encouraging Corporate Philanthropy last year, as he mused on why so much corporate giving achieves so little impact: “I firmly believe that now we have to raise the bar”. We agree. But if shared value is going to be about anything more than the status quo, there need to be different people at the table.

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via philanthrocapitalism.net

 

Co-Producing Shared Value

I attended three very different events last week – all of which in some way strengthened my confidence that there’s a real market for  shared value supply chains.

The first event was the CUTEC (Cambridge University Technology and Enterprise Club) Technology Ventures Conference.  One of the key speakers was Mike Addison, Global Head of Business Development at P&G speaking on open innovation.  You don’t tend to think of P&G as a hugely open company, but he had some strong examples and ended on a plea to all the entrepreneurs in the room to approach P&G and challenge them on how they do everything and help them co-create better products.  A call-to-action for co-production between supplier and customer.  No explicit reference to social entrepreneurs or social value – but an interesting insight into how even quite traditional businesses are now thinking.

Later that evening I attended Matthew Taylor’s excellent President’s Address at the RSA – Enlightened Enterprise.  Matthew focused a great deal on the power of big business as a tool to instigate behaviour change amongst consumers: “by helping us to align our desires, needs and social values, companies can themselves align commercial opportunity with social purpose. By doing so, they can create both deeper customer relationships and new business models.” – and followed with great examples from Nike to Dove.  He also referenced ‘downstream’ CSR – how consumers behave after they have purchased a company’s product.   Finally, he ended with “If an enlightened company has insights and capacities which can improve the efficiency and sustainability of those in its supply chain, it will see the benefits of sharing that wisdom around. Some of the best and most innovative responsible practices are in the SME and social enterprise sectors; enlightened partnering by larger companies can tap into and enhance this potential.”

The Video is embedded below and I’d recommend anyone to take an hour to watch it.  Hopefully it will be RSA Animate-d soon.

Matthew was joined by Ian Cheshire, CEO of Kingfisher (parent organisation of B&Q). Ian seems genuinely to have a sustainability agenda at the core of his beliefs and has worked hard to integrate it through the company.  But he admitted that convincing shareholders of the value was much tougher, lamenting that  there is nothing in the valuation of a company that reflects its sustainability.  “You just can’t discuss life beyond 5 years with investors.  I only do it because I think it’s right”.  He added  that in order to do this we must change pension funds from quarterly reporting to longer term. (Interesting aside – the comment from Paul Polman, CEO of Unilever at a recent conference: “We cannot choose between growth and sustainability – we must have both. If you buy into our approach to long-term value creation… then invest in us, if not… don’t”).

Matthew Taylor ended his talk by saying he sees success as an end to the use of CSR as phrase – as it suggests it’s not a mainstream and inherent part of business.  I couldn’t agree more. 

Finally on Friday I attended UnLtd’s Social Futures event: a coming together of social entrepreneurs, UnLtd staff & trustees, civil servants, private sector staff and some of our partners to help co-produce some of our new products (insightly written up by the ever-insightful Nick Temple here).  One key piece of research, commissioned by UnLtd and delivered by Sidekick Studios, showed that for our Award Winners  the most important step along their journey was finding the first big customer.  It was also the number one request for support they didn’t feel UnLtd currently offered.  I took the opportunity to lead one of the break-out groups tasked with developing products that UnLtd might launch to target this problem.  It was a rapid exercise, resulting in a poster and 2 minute presentation – but we developed a concept of brokerage: UnLtd providing a consultancy service to big businesses (understanding their supply chain needs) and then scouting, filtering and connecting relevant social businesses to them.  Richard Tyrie of Good People was in the team and he is obviously very interested in this area.  His research suggested a £150bn market for the Social Value bill alone.  And he had strong examples of other areas where consumer-facing companies make financial benefits from social value creation including Tesco’s mobile phone recycling initiative that saw huge growth in sales of new phones for Tescos – great shared value through what Matthew Taylor would call downstream CSR. The 9 pitches went to the public vote and ours won (positive comments ranged from ‘this is bringing CSR into the mainstream…’ to ‘this is bringing social entrepreneurs into the mainstream!’).  Sadly no big money prizes – but a good indication there is support from varied stakeholders for the initiative.

One of the other key findings of the UnLtd research was that there’s a commitment gate that entrepreneurs pass-through.  Confidence is needed to get through each gate.  I feel these three events mean I’ve past through one commitment gate.  This blog is now live…

 

CSR, CSV, wellbeing and sustainability

This blog is principally (selfishly) about me learning about this blossoming space – me better understanding how we, as a society, can re-align values to create a better future. I’ve set out my basic starting hypothesis – namely that this can be achieved through big businesses and social businesses working together – in the posts below. But this needs to be stress-tested, challenged and amended. So, from now on I aim for the blog to focus on highlighting examples of where attempts have been made to re-align values in this way, hearing the thoughts of key people defining the space and asking for ongoing feedback as the theory evolves.

As I mentioned, an early cue for my thinking came from Michael Porter’s ‘Creating Shared Value’ (CSV) paper. This has just had, if not an outright dismissal, then certainly a gentle dampening of expectations from John Elkington. I agree with the views expressed that it’s naive to suggest everything can be win-win for businesses but think it’s equally naive to expect everyone will embrace a sustainability or wellbeing agenda (cf recent article by Jules Peck – I shall follow these with interest) just because. In this light, I think the most valuable thing CSV can initially do is be used as a means to frame social value – to make it more appealing for businesses. Like a psychological trick to help better understand why CSR and sustainability, when done right, can be very profitable. I hope that introducing shared value supply chains allows us an easy way to prove the theory.

There’s a suggestion in the comments that ‘triple bottom line’ is making a comeback. It’s undeniable that triple bottom lines are necessary for big businesses. I guess my concern is whether it is necessary or advisable for smaller, social businesses to have this too. If the ultimate goal is to create an overall triple bottom line society, are we better to focus on building the most resilient individual building blocks or insist that every element of this society is itself triple bottom line?

 

The Problem with Corporate Social Responsibility

Corporate Social Responsibility has always struck me as an industry caught between a rock and a hard place.  Often championed by sincere and genuine individuals (including the CEOs of the companies) and tolerated by the rest of the business, the public is left with high levels of cynicism and scepticism. 

It has (to my mind, rightly) received a measure of back-lash as a result – to really question what the goal of CSR is and how it fits into wider strategic objectives of a company.  CSR and sustainability agendas still aren’t as interesting to investors as they are to customers or staff, so most CSR is public-facing rather than behind the scenes where it could make the largest difference. All too often, as a result, CSR has reverted to a) simply charity giving (of cash or staff time), unaligned to any wider company strategy; b) greenwashing – or defensive PR and marketing programmes to cover up or divert attention away from social damage inherent in their business (high fat foods brands sponsoring grass-roots sports events).

Most depressingly recent engagement with the social enterprise space has followed this same line: focussing on pro-bono support, sponsorship of conferences or funding of support programmes.  I consider all these more or less as classic CSR ‘solutions’ that fall into the same trap of reinforcing the competing nature of creating financial value for the company and creating social value – just like government intervention, consumer boycotting and classic corporate philanthropy.    Social value is viewed as a necessary cost of doing business, rather than a potential financial benefit.

I suspect CSR is at its best when it works behind the scenes – I’m thinking about how sustainability principles can be built into supply chains, reduing costs whilst also reducing social and environmental damage. 

This concept has been taken even further through discussions around ‘Shared Value Creation’ principally instigated by Michael Porter & Mark Kramer: using the core competencies of a business to proactively deliver social value that simultaneously acts as a profitable revenue stream.  In their own words: ‘cutting across the traditional divide between the responsibilities of business and those of government or civil society.  From society’s perspective, it does not matter what types of organisations created the value.  What matters is that benefits are delivered by those organisations – or combinations of organisations – that are best positioned to achieve the most impact for the least cost.’

This seems a very sensible and ultimately attractive theory of change that points to the future.  But real-life examples of this centre around the concept of Corporate Social Innovation, predominantly in the developing world, of businesses building or strengthening new markets for themselves through delivering a social good.  Well known examples from Grameen Danone to Vodafone M-PESA are outlined in more detail by the good folks at Volans (subscription to Social Enterprise Live required (and recommended)).   My question is, how can we embed these principles in the day-to-day operations of big businesses up and down the land, without relying on major stand-alone initiatives that require significant resourcing.

Building Shared Value Supply Chains >