I’ve been giving the concept of Corporate Social Responsibility (CSR) a lot of thought over the last few weeks.
With the fall out from the global financial crisis dominating the news, it may have slipped some peoples attention that this is the year that ISO 26000, currently a draft standard, is finally published.
Admittedly it will be a voluntary standard, but isn’t that the true essence of CSR? It’s not about forcing corporations to comply, but encouraging them to realise that in the pursuit of a glowing bottom line, their actions can have a wider and altogether more negative impact.
One of the other features about CSR is that it’s not just about reporting your CSR compliance, but living it too. In the early days, when the term and ethos was gaining ground, several large organisations really stood out from the crowd in their openness about CSR reporting. However, whilst the reports looked good, close scrutiny revealed that the organisations weren’t living up to the true spirit of the ethos. A rapid backtrack was witnessed and a few embarrassed CEO’s were forced to admit they weren’t as socially responsible as initially claimed.
Understandably the whole concept has its supporters and its detractors.
In support an embedded appreciation of CSR can influence the following areas.
- Human Resources: In both recruitment, retention and the way employees feel about their organisation. Working for a socially responsible firm just feels better!
- Risk Management: This is heavily based around reputation damage. The perception that the organisation is not socially responsible can do untold damage, very rapidly.
- Unique Selling Point: Although the concept has been around since the 1970’s there are still vast areas of the market place not aligning themselves with CSR. Adopting a positive approach to CSR can act as an effective brand differentiator, in a market where the consumer is increasingly more aware of this area.
- Licence to Operate: Although voluntary in the UK & USA, certain areas of Europe, most notably France do have regulation about the need to adopt and report on CSR. Along with areas such as Diversity, the environment and Health & Safety, if an organisation can convince governments, regulators and the general public it has sound CSR the acceptance of their trading activities are enhanced.
One of the strongest arguments against CSR is that it is incompatible to the aims of business. Most notably the late American economist Milton Friedman argued that an organisation’s purpose was to maximise the return to shareholders and that was the only responsibility they had.
Others have argued that organisations have undertaken CSR to detract from a negative public perception of their activities and in this way are not actually acting responsibly, but engaging in duplicitous activities and spin. The most prominent of these examples are possibly BP and British American Tobacco (BAT).
The debate around the rights and wrongs of CSR will no doubt continue for a long time to come, but in the final analysis, surely we all want to be associated with a successful business that was at heart GOOD.
Profits may not be so high, but there is as yet, no categorical study to prove that adopting a CSR approach is fundamentally damaging to business, and maybe, just maybe, this is the way forward for us all?
Matthew Scott, Dip. Management, Cert. MCE.
The views expressed in this article are solely those of the author and do not necessarily represent those of the IIA.