Answering Reader Comments: Quantifying CSR to Spur Action A "Slippery Slope"

Yesterday, I blogged about the Indian government considering mandating a trading system for CSR credits. (Read: A CSR (Stock) Exchange: The Case for Doing Good as an Economic Imperative?) The issue, highly debatable in its very nature and implications, got many fellow CSR bloggers and advocates talking in Twittersphere. Dave Harrhy, who blogs on CSR, community development and leadership coaching, brought up several interesting questions. Here is my attempt at dissecting them and continuing the discussion.

1. Does the ability of a "dirty" company buying CSR credits diminish the value of CSR as a whole? The richness and arguably the point of CSR is to engage in activities that have a relationship with the overarching corporate strategy. The purchasing of credit activities can result in the commodification of good work - which ultimately cheapens it and should raise skepticism on the part of all stakeholders.

I agree on the essential core of this argument. The quantification of a good deed negates its goodness. And the point of CSR is to have a robust giving-back-to-your-stakeholders approach as he points out. Appointing values to these will trigger skepticism and critical stakeholders are necessary for any business to stay true on their path to sustainability.

2. How do we add value to various CSR initiatives and who should be the arbiter? ROI for CSR has always been hard to measure, the rating of certain activities over others can lead to an oversupply of one activity at the expense of the other. CSR activities are largely organic and reflect the diversity of the sponsor. Adherence to a prescribed value system will ultimately diminish the effort, responsibility and innovation that organizations are increasingly compelled to show.

Very pertinent point and one that I touched on last week when I discussed the doubts and confusions Wal-Mart is already hitting in their attempt to create an industry-wide Sustainability Index. What activity gets more points? How to prioritize the many elements of a CSR strategy can be far ranging from macro initiatives like water conservation to micro in-house initiatives like energy efficiency and recycling? If these were to be quantified, there is bound to be, however unintentional, marginalization of certain measures. And these might propel certain companies ahead in the game while deeming others as not doing enough. Then there is the issue of ROI on CSR. This argument has been hotly debated for a while now and there is no one real answer except this one: The ROI on being socially responsible is inherent in a company's reputation, employee loyalty, brand awareness, community reach and shareholder interest. It is these intangibles that arise from a good long-term CSR strategy that lead to a profitable triple bottom line.

3. Does the involvement of government in this diminish the role of corporations to be curious about their own impact? And if so is this an appropriate role for government to play?

The role of the government in any sphere of private business is controversial. Be it their increasing role in regulating Wall Street, the auto industry or the clean energy industry, government involvement is almost never welcoming. However, in this area of doing good, where questions of ROI, profit margins and shareholder ire dictate more decisions than socialistic reasons, government regulation might be the very wand needed to bring change. And about the role of corporations being curious about their own impact: How many businesses can we honestly pinpoint and declare as conscious of their social and corporate footprints? Especially in a post-recession decade where jobs, profits, bonuses, and mortgages are more important on everyone's mind than saving the Planet. In such a putrid atmosphere, if the private sector doesn't take note and begin taking active action on improving their sustainability quotients, t will have to come in the form of legislative mandates.

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