Is Corporate Social Responsibility Really Core to Business?

By & Kim Faulkner 21 Sep 2011

In business today, green is the new black.  Companies say they want to “do well” by “doing good”, and corporate social responsibility (CSR) has been steadily gaining ground in corporate communications and business summits. But peel away the patina, and you’ll find some companies are more social than responsible about their stand. Are these companies really doing good, or just promising to do less harm?

What’s wrong with this picture?  Why aren’t companies (and consumers, for that matter) all that they want to be?  We think there are two main reasons.

First, consumers want corporations to do the right thing -- but right now, they just don't want to pay for it.  This isn’t to say that all the research on the ethical consumerism and CSR is wrong.  It’s just that individuals tend to dramatically overstate the importance of social and ethical responsibility when it comes to their purchasing habits.  To put it bluntly, there’s a gap between what people say, and what they do. (When BP’s Deepwater Horizon rig spilled millions of tonnes of crude oil off the Gulf Coast, how many of us stopped filling up at BP?)

For more ethically oriented consumption to take hold (which in turn would give companies more reason to be socially responsible), We believe consumers need to become more knowledgeable participants in the equation.  Firms need to help their current and future customers become more socially conscious in their purchasing.  Anita Roddick was far-sighted enough to recognize this way back in 1976 when she founded The Body Shop.  It took some time and consistent communications, but today the company is the second largest cosmetics franchise in the world, with 2,400 stores in 61 countries. 

The lesson is clear: Brands have an opportunity to play into the need of consumers to be global citizens, and -- through their brand choices -- to do the right thing.  Give them that chance, and you’ll build their spirit while earning their loyalty.

The second, and more critical reason, is there simply isn’t alignment between brand strategy and business strategy. 

Businesses have always been ready to embrace corporate social responsibility – as long as it doesn’t hurt the bottom line.  How can you tell if your company suffers from such a dysfunction?  Fairly easily, actually: CSR leads who report into the PR department, and who don’t carry any quantitative, business-related KPIs. Business unit heads who don’t – or won’t -- carry any CSR-related KPIs.  Platitudes that pass for CSR nods in blasé corporate mission statements.  Companies where these leaders bump into one another only during the annual dinner & dance.

There is, however, hope. Some companies have taken the very hard first steps on their journey towards true corporate social responsibility.  They have executed the first (and in some cases, the second) of what to me are the four key milestones on the road to true social responsibility

1. The promise (they commit to the ideal)
2. The development of a plan that defines how they will make the change
3. The implementation of the programme
4. The measurement and report on impact 

Their achievement is simply this – in order to present the image of a business that cares about people and our planet, they actually became businesses that care about people and the planet. They took time out to weigh the importance of the “Do Good” conversation and then they took a stand. These organisations decided on a position and they took pains to translate and communicate that decision internally and externally.

Banyan Tree Resorts is a terrific example of a growing business that also enriches both the environment and the society around it. In the early 1990s, Ho Kwon Ping purchased 600 acres of coastal land in Phuket, Thailand that was punctuated by lagoons of the most intense cobalt blue.  Only to discover that its beauty came not from Mother Nature, but the pollution of a previous tenant, a tin mine. Rather than walk away, the company dedicated itself to cleansing the acid-laden soil and planting 7,000 trees. Their dedication to an ecologically sound resort helped nurture damaged coastal land back to into a living ecosystem. Their reliance on the local community, not just for fair-waged staffing but also for produce, meant livelihood for the people in the community. Banyan Tree grew the economy around its business. This socio-environmental investment was to grow more than just their dollar and the Banyan Tree’s 3BL approach has catapulted their business into nine countries across the globe.

Patagonia, dubbed the “coolest company on the planet” by Fortune magazine in 2007, has earned its sustainability stripes by holding and imposing some tough principles on itself and its suppliers. A prime example is its stand on conventionally grown cotton.  Heavily dependent on noxious pesticides and defoliants, cotton is an environmentalist’s nightmare.  Patagonia decided to switch to organic cotton in 1994 – even though it cost 50% - 100% more than regular cotton, and 20% of Patagonia’s business came from cotton products.  The gamble paid off: After a tense 18-month transition, the market voted, Patagonia’s sales rose 25%, and more importantly, an organic-cotton industry was established, allowing other companies to cross over.  Today, the company continues to ignore fashion trends, and tells its customers that “the more you know, the less you need”.  In spite of this – or perhaps because of it – the brand has achieved cult status; and is sometimes referred to, by fans, as Patagucci or Pradagonia.

Closer to home, our client Bank BTPN is making its own mark in Indonesia.  Over the past year, Activiste has helped it to create an enabling platform, leveraging its strength in the mass market segment and transforming disparate lines of business into an eco-system that nurtures small enterprises for sustainable economic growth.  The recently launched ‘Daya’ platform (which aptly means “source of light/energy”) signals the integration of the bank’s brand and business strategy, and is firmly grounded in the bank’s brand intent to “improve the significance potential of every Indonesian”. This is more than just the usual ‘PR catch all’ of alleviating mass poverty in an emerging economy, but also about lending significance to the lives of Indonesians by providing them with the means and tools to lead a more meaningful life: from loans to health and wellness education, free clinics and basic medication, to personal enablement programmes. BTPN has also retooled its retail funding business by offering affluent customers an opportunity to increase their ‘significance potential’ – to get a significant return on their investment, and leave a significant impact on society.  In totality, the bank has integrated its social and business missions into products, services, and partnership programmes that benefit the whole community.

In summary, corporate social responsibility is not an overnight bolt-on for corporate communications. It requires a real commitment in order for a company to live up to its claims.  The younger generation of knowledge workers today don’t want to work for a company that doesn’t have a clearly stated vision around this.  It matters to them.  And increasingly, it matters to the market.

So ultimately, the question isn’t “Can we afford to do this?”  But rather, “Can we afford not to?”