What Is Corporate Social Responsibility?
Corporate social responsibility has become the in thing for companies to be doing. But what is it, and what does it mean to be a truly responsible organisation? Corporate social responsibility may encompass a range of different kinds of activities, all of which demonstrate the responsible nature of the organisation. The dictionary defines corporate social responsibility as:
“The corporate belief that a company needs to be responsible for its actions – socially, ethically, and environmentally”.
However, this is something of a misnomer because not all companies that practice corporate social responsibility have projects in each of these different areas. Some may focus on the environmental over the social, and vice versa. The general idea however, is that corporate social responsibility is to do with the organisation “doing good” and giving something back, especially to the poorer communities or areas in which it operates. This could include developing partnerships with local communities to bring about change, or taking steps to protect the environment and become a more sustainable business, or creating more responsible working relationships with both employees or customers, or even socially responsible investment. This does not encompass the simple fact of giving away money. Giving money without understand where it is going is not considered responsible, so does not really fall under the CSR umbrella.
One important question about corporate social responsibility is why companies would bother with it at all. After all, their ultimate goal is to maximise profit for the shareholders. However, there is a growing train of thought (based on considerable research) that customers no longer want to buy from companies that are irresponsible. Customers care about where their goods come from. They do not want to think that their purchase has led to people suffering or the environment being irrevocably damaged. So they vote with their feet when they don’t like what they see. That means they shop elsewhere – somewhere that doesn’t do the harm. This has transformed corporate social responsibility to a “maybe have” to a distinct competitive advantage and an absolute essential for most businesses.
Trust plays an important part in CSR and not all CSR initiatives have necessarily been good. There have also been problems with companies saying one thing and doing another. This has led to a strong degree of cynicism about real Corporate Social Responsibility, and with good reason. Remember the Rama Plaza disaster in Bangladesh last year? Maybe you don’t. Rama Plaza was a factory complex which collapsed and more than 1,000 workers died. Many of the same companies that espouse “ethical trading” and who claim that they behave in ways that are responsible still get clothing supplied from factories like Rama Plaza where sweat shop conditions apply and workers are forced to endure completely unacceptable conditions. Primark in particular is an example of this and many of the people killed and injured in 2013 at Rama Plaza were producing clothes for this retail chain, despite claims of ethical trading on the company’s website. It is this type of exposure that leads people to be a bit cynical about what big corporations are really doing for CSR.
Shanaz Musafer (2012) of the BBC provides a helpful overview of what CSR is all about. Musafer also explains that CSR programmes need genuine authenticity. Indeed, Musafer opines that if you are not authentic about what you are doing, that is precisely when people become sceptical about your organisation. This can be more damaging than not doing corporate social responsibility at all. Though more than 10 years ago, the collapse of Enron and the scandal surrounding that did a lot to discredit CSR because as Musafer states:
“Enron was well-known for its CSR, and published social and environmental reports on all the good work it was doing. The trouble is, at the same time it was lying about its profits”.
It is behaviour like this that really undermines the good work that CSR can do both for the community and the corporation. This means that the left hand has to know what the right hand is doing. The PR department can’t be telling the world about how the organisation is making great strides with fair trading in Africa, only for the operations team to squeezing small producers hard in Latin America at the same time. That’s hypocrisy, and it will get found out. The corporate social responsibility has to be a part of the company’s culture and core beliefs.
But how to do it ? How to transform the company´s culture in a profound way ? There are some ideas out there. Some of these, are presented in the following animated video, made by the Institute for Business Ethics at the University of St. Gallen. The Institute tries to counter the problems of CSR outlined previously, by making a team of experts evaluate extraordinary achievements in the field of corporate social responsibility. The video is narrated by Prof. Thomas Beschorner, who is the director of the Institute, who introduces us to what is corporate social responsability, and what are the necessary steps to implement a proper corporate social responsability that is meaningful and is contributing for the world in general in a beneficial way.
Paula Newton is a business writer, editor and management consultant with extensive experience writing and consulting for both start-ups and long established companies. She has ten years management and leadership experience gained at BSkyB in London and Viva Travel Guides in Quito, Ecuador, giving her a depth of insight into innovation in international business. With an MBA from the University of Hull and many years of experience running her own business consultancy, Paula’s background allows her to connect with a diverse range of clients, including cutting edge technology and web-based start-ups but also multinationals in need of assistance. Paula has played a defining role in shaping organizational strategy for a wide range of different organizations, including for-profit, NGOs and charities. Paula has also served on the Board of Directors for the South American Explorers Club in Quito, Ecuador.