Burgess COMMENTARY

Peter Burgess

Will Corporate Social Responsibility Adapt or Die?

I recently launched a book that mapped out the disruptive global trends today’s companies needed to futureproof themselves against. The book in turn launched a stream of conversations, each person describing yet another sector, company or movement in need of futureproofing.

I did not, however, expect Corporate Social Responsibility (CSR), itself a force disrupting the status quo of business, to be added to the list.

It was Wayne Dunn, Professor of Practice in CSR at McGill and President of the CSR Training Institute, who first described CSR’s ailment to me. In his words:

CSR is often somewhat ghettoized inside corporations, off playing in a sandbox of its own at the margins of the business.

Much of the reason for this is that the CSR professionals (myself included) have not done a good job of helping corporate divisions like Finance, Engineering, Operations, R&D, etc. to understand why CSR is important for them.

Recent research lent credence to Dunn’s assertion, underlining that all was not well in the CSR camp. Despite widespread adoption of CSR in business, little meaningful progress has been made across a range of metrics. Greenhouse gas emissions, for example, have grown nearly twice as fast over the past decade as compared to the past 30 years.

We’ve seen enough case studies to know that CSR makes financial, as well as social and environmental sense. We also know that not adopting CSR will ultimately lead to business disaster.

So why isn’t CSR working? The obvious answer is that our current business model isn’t conducive to creating the radical change that’s needed to restore our planet’s health.

As Michael Townsend writes

…if maximizing profit is our primary purpose, then everything else will be subservient to this aim. We can, perhaps, seek to optimize the returns we make while delivering a balanced range of environmental and societal impacts, but it is highly unlikely we can aim to maximize profits at the same time. We cannot serve two masters. In this framing, CSR only ever can be an adjunct to the main purpose of the business.

If that’s the case (and I believe it is), CSR will continue to be treated like risk management window dressing, creating little more than shiny reports to assuage shareholders. It will remain marginalized, and eventually die the quiet death of a failed experiment.

Evolution through innovation.

Peter Bakker, president of the World Business Council for Sustainable Development, described the demise of CSR in his talk at the Sustainability Science Congress in Copenhagen. However, his key argument was that leading companies are going beyond CSR by integrating sustainability into everything they do. Witness Nike’s Considered Design and Unilever’s Sustainable Living Plan. In short, the old-school concept of sustainability as risk management is being usurped by the idea of sustainability as innovation.

This model makes sense for two reasons.

First, innovators thrive on constraint. As ad legend David Ogilvy said “Give me the freedom of a tight brief.” Being forced to design a car that goes further on less gas or packaging that biodegrades not only provides focus, but spurs original thinking.

Second, eco-innovation creates a culture that eco-responsibility can’t match. We may not be able to steer companies by the old ‘profit at all costs’ ethos anymore, but as the failed experiment of CSR has shown, we can’t expect business to adopt responsibility if there is no reward. Innovation provides that reward.

So is CSR doomed? Yes. But if innovation is what steps into its shoes, we shouldn’t be grieving its passing.

Social Business MBA student • 4 days ago I get the point, I really do. But lets be careful NOT to scare away well-intentioned companies that want to join the CSR movement, but are afraid that they can't do enough (typically smaller, resource-strapped businesses). I'm researching the issue locally and mostly what I hear is a) how do we begin? and b) are modest contributions really going to matter? Small businesses are responsible for 54% of US revenues and 55% of US jobs. The cumulate impact of the small business sector can be enormous. Your point is valid, I'm just asking that we don't turn off potential recruits. 1 • Reply•Share ›

Avatar Marc Stoiber Social Business MBA student • a day ago

Point well taken.

I had no intention of dissuading people from making a difference. But the current model of CSR needs to adapt and evolve. Otherwise it will become irrelevant as it is bypassed by other, more innovative solutions.

I'd love to write about more companies that are adopting CSR in a way that's blowing minds and winning wholesale support. If you have stories like that, please send them to me and I'll make sure they get written about!

Cheers, M • Reply•Share ›

Avatar WilliamFreimuth • 3 days ago

Last Week Tonight with John Oliver: Tobacco (HBO) - Duration: 14:36.

by Bande Sande 74 views • Reply•Share ›

Avatar CSRHub • 2 hours ago

Congrats on the book and thanks (as always) for your original thinking. As you know, I'm one of your biggest fans!

However, I hope you will allow me to introduce a few facts from CSRHub's database into this discussion.

A. Many more companies capture/track information about their social performance now than did five or ten years ago. We recently studied 18,000 companies from 14 different countries. Almost 70% are reporting on at least one of the twelve measures of sustainability that we track.

B. You chose corporate carbon production as an example of where CSR has failed. However, this is probably the best example of success. Look at measures from NGOs such as CDP and the EIO, SRI sources such as Trucost, EIRIS, Vigeo, Thomson, or MSCI, or supply chain metrics from EcoVadis, TSC, CSRware, Enablon, or OneReport. All of them show huge reductions (>50% in most cases) in corporate carbon use over the past five years. Performance improvement is spottier in other areas, but today's corporation is more diverse, less resource intensive, better governed, and more responsive to its community than it has ever been. This is true not only in the US and Europe but also across the 13,700 companies we track in 127 countries.

C. Recent research (including work we've done) has tied CSR performance to things such as brand strength, reputation strength, lower interest rates, and more stable profit margins. Given how early we are in the history of measuring sustainability performance (few solid data sets go back more than 8 or 10 years), we have a remarkable amount of fact-based evidence that CSR is an important part of making companies more successful. Add anecdotal evidence to this and I believe most senior corporate managers would say it is important to improve their company's social performance.

While I've disagreed with some of your facts, I agree with the opinion that CSR professionals have done a poor job of making their work important to other parts of their company. They need better tools, more research, and stiffer backbones! They need to take credit for the value they have been creating and demand that their goals be included within their corporation's broader goals and culture.

You may be correct that a few 'advanced' companies have gotten to the point where they have run out of new CSR initiatives. For these few leaders, innovation into new areas is the only way to move forward. However, there are tens of thousands of companies who are only starting their journey towards a more sustainable future. Let's get the 69% of the 70% I mentioned above to the 'awareness' level of Nike, motivate the other 30% of larger companies who haven't done anything to get started, and get government entities, NGOs, and private companies to start thinking about and reporting their social performance. We can then shift our energy into innovating and looking for new things to do.