President Bill Clinton's election campaign used the expression of "It's the economy, stupid," to full advantage in 1992 against George H. W. Bush. I use a similar version of this sentence to illustrate the dilemma facing executives today and CSR.
I firmly believe that charities and philanthropy have won the strategic battle between business risk and corporate social responsibility. If we poll the general public (not the authors of ISO 26000, which clearly state that social action is not CSR), they will say that CSR is more about “charitable projects undertaken by companies, than, for example, management response to social, economic or environmental risks.
Why am I still having this argument?
If after 12 years the concept has still not settled in, what makes us think that it will in the next two or three? Let's look at recent history:
- • 12: The United Nations Global Compact was launched 12 years ago.
- • 8: The ISO 26000 project started eight years ago and finally culminated earlier this year.
- • 6: The European Union Green Paper was adopted in 2005, or six years ago.
All these initiatives were aimed at linking CSR to core business, a concept that went beyond philanthropy and advocated the right way of doing business.
CSR: An Undefined Concept With Multiple Consequences
My argument that CSR is not the right expression to use is not an academic problem but one that has very tangible consequences for companies. Among others, most paramount are:
- •Organizational: The classic case of the left hand not knowing what the right is doing. Most of the time, the rest of the company doesn't know what the CSR team/executives do.
Defined functional areas don't suffer from the same vagueness. HR is dedicated to people, the finance team crunches numbers, the operations team is in charge of systems and back up, etc. But how do you identify the team dedicated to such a vast array of duties, i.e., diversity and inclusion, environmental management, climate change, ethics, corporate volunteer management, social sponsorships, entrepreneurship, multistakeholder engagement, transparency, SRI, reputation, and human rights?
What we get instead is a big mess.
• Structural: If CSR is about philanthropy—as a recent Smartbrief poll seemed to imply—management will accordingly participate in sponsorship, PR and communications exercises because their objective is maximizing the return of investment in reputation building, not responsible and ethical business.
For most companies, in fact, it is common practice for the CSR manager not be associated with evaluating social and environmental risk.
• Budgetary: Let's be honest. We all know that it is much easier to ask for a budget to implement philanthropic programs than for mapping out a business' core environmental risks, or implementing an ethics code, or auditing the supply chain.
Even in the best case scenarios, other areas of an organization will manage these issues as part of their day-to-day work but the reality is that when something is difficult to communicate, resource allocation becomes a much harder task.
• Management: It's easy to measure the impact your donations are having by stringing out the appropriate key performance indicators (KPI) for any given year.
But what KPI efficiently summarizes responsible behavior? The resulting scorecard is usually so large and convoluted that even the most dedicated executives give it up because of its sheer confusion and lack of focus.
Solution: Moving From CSR to Sustainability
This is a debate about organizational development, structural solutions, resource allocation and effective management. As I said earlier, if after 12 years the concept hasn't settled in, what makes us think it will in the next two or three?
The alphabet soup of CSR, CR, ESG, CSV, etc. that we continue to argue over is nothing more than further evidence of this inadequate clarity.
And this is why I believe that the term "sustainability" can bridge the gap effectively and tangibly because right from the outset it focuses on the long term. Because you're compelled to think in the long term, you must manage your risk. To identify new opportunities, you will have to develop a sustainable business model that is built on a foundation of trust.
The only problem? Shifting common perception of sustainability as an environmental concept. And that's why I like the Dow Jones Sustainability Index definition:
"Corporate sustainability is a business approach that seeks to create long term value for shareholders by taking advantage of opportunities and the effective management of risks inherent in developing economic, environmental and social."
The concept of CSR has been exhausted, we have to expand it for effective impact, and for that, we have to adopt sustainability.
And that's why I say, "It's sustainability, stupid!"
--By Alberto Andreu
CSR Battle, Part 1: For Edelman's SVP for CSR, CSR Is an Evolution, Not a Revolution
The Great Battle of Terminology: Shifting from CSR to CSV Isn't the Solution
The blog that started the debate: Why Don't Executives ?
Alberto Andreu is the Chief Reputation Officer & Sustainability Manager with Telefonica. He also teaches Organizational Behaviour and Corporate Identity and Culture at the IE Business School, and holds a seat on the Spanish CSR Council. Andreau serves as Vice President of the Global Compact Spanish Steering Committee; counsellor of the Javier Benjumea's Chair of Ethics at Universidad Pontificia de Comillas (ICADE-ICAI); and is the General Secretariat of the Spanish Intangibles Institute.Connect with him on Twitter @aandreup.
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