CORPORATE SOCIAL RESPONSIBILITY Just good business
Jan 17th 2008 From The Economist print edition Corporate social responsibility, once a do-gooding sideshow, is now seen as mainstream. But as yet too few companies are doing it well, says Daniel Franklin (interviewed here)
Illustration by Ian Whadcock
IN THE lobby at the London headquarters of Marks & Spencer, one of Britain's leading retailers, the words scroll relentlessly across a giant electronic ticker. They describe progress against “Plan A”, a set of 100 worthy targets over five years. The company will help to give 15,000 children in Uganda a better education; it is saving 55,000 tonnes of CO2 in a year; it has recycled 48m clothes hangers; it is tripling sales of organic food; it aims to convert over 20m garments to Fairtrade cotton; every store has a dedicated “Plan A” champion.
The M&S ticker says a lot about the current state of what is commonly known as corporate social responsibility (CSR). First, nobody much likes the CSR label. A year ago M&S launched not a CSR plan but Plan A (“because there is no Plan B”). The chief executive's committee that monitors this plan is called the “How We Do Business Committee”. Other companies prefer to describe this kind of thing as “corporate responsibility” (dropping the “social” as too narrow), or “corporate citizenship”, or “building a sustainable business”. One Nordic executive glories in the job title of director, accountability and triple-bottom-line leadership. All this is convoluted code for something simple: companies meaning (or seeming) to be good.
Second, the scrolling list shows what a vast range of activities now comes under the doing-good umbrella. It spans everything from volunteering in the local community to looking after employees properly, from helping the poor to saving the planet. With such a fuzzy, wide-ranging subject, many companies find it hard to know what to focus on.
Third, the M&S ticker demonstrates that CSR is booming. Whether through electronic screens, posters or glossy reports, big companies want to tell the world about their good citizenship. They are pushing out the message on their websites and in advertising campaigns. Their chief executives queue up to speak at conferences to explain their passion for the community or their new-found commitment to making their company carbon-neutral. A survey carried out for this report by the Economist Intelligence Unit, a sister company of The Economist, shows corporate responsibility rising sharply in global executives' priorities (see chart 1).
None of this means that CSR has suddenly become a great idea. This newspaper has argued that it is often misguided, or worse. But in practice few big companies can now afford to ignore it.
Beyond the corporate world, CSR is providing fertile ground for think-tanks and consultancies. Governments are taking an ever keener interest: in Britain, for example, the 2006 Companies Act introduced a requirement for public companies to report on social and environmental matters. And the United Nations promotes corporate responsibility around the world through a New York-based group called the Global Compact.
Business schools, for their part, are adding courses and specialised departments to keep their MBA students happy. “Demand for CSR activities has just soared in the past three years,” says Thomas Cooley, the dean of New York University's Stern Business School. Bookshelves groan with titles such as “Corporation Be Good”, “Beyond Good Company” and “The A to Z of Corporate Responsibility”.
Why the boom? For a number of reasons, companies are having to work harder to protect their reputation—and, by extension, the environment in which they do business. Scandals at Enron, WorldCom and elsewhere undermined trust in big business and led to heavy-handed government regulation. An ever-expanding army of non-governmental organisations (NGOs) stands ready to do battle with multinational companies at the slightest sign of misbehaviour. Myriad rankings and ratings put pressure on companies to report on their non-financial performance as well as on their financial results. And, more than ever, companies are being watched. Embarrassing news anywhere in the world—a child working on a piece of clothing with your company's brand on it, say—can be captured on camera and published everywhere in an instant, thanks to the internet.
Now comes concern over climate change, probably the biggest single driver of growth in the CSR industry of late. The great green awakening is making company after company take a serious look at its own impact on the environment. It is no surprise, therefore, that 95% of CEOs surveyed last year by McKinsey, a consultancy, said that society now has higher expectations of business taking on public responsibilities than it did five years ago.
Investors too are starting to show more interest. For example, $1 out of every $9 under professional management in America now involves an element of “socially responsible investment”, according to Geoffrey Heal of Columbia Business School. Some of the big banks, including Goldman Sachs and UBS, have started to integrate environmental, social and governance issues in some of their equity research. True, the finance industry sends mixed signals: it demands good financial results above all else, and in parts of the financial world—notably the private-equity part—scepticism on CSR still runs deep. But private equity itself is having to respond to public pressure by agreeing to voluntary codes of transparency.
As well as these external pressures, firms are also facing strong demand for CSR from their employees, so much so that it has become a serious part of the competition for talent. Ask almost any large company about the business rationale for its CSR efforts and you will be told that they help to motivate, attract and retain staff. “People want to work at a company where they share the values and the ethos,” says Mike Kelly, head of CSR at the European arm of KPMG, an accounting firm. Too much of a good thing?
Since there is so much CSR about, you might think big companies would by now be getting rather good at it. A few are, but most are struggling.
CSR is now made up of three broad layers, one on top of the other. The most basic is traditional corporate philanthropy. Companies typically allocate about 1% of pre-tax profits to worthy causes because giving something back to the community seems “the right thing to do”. But many companies now feel that arm's-length philanthropy—simply writing cheques to charities—is no longer enough. Shareholders want to know that their money is being put to good use, and employees want to be actively involved in good works.
Money alone is not the answer when companies come under attack for their behaviour. Hence the second layer of CSR, which is a branch of risk management. Starting in the 1980s, with environmental disasters such as the explosion at the Bhopal pesticide factory and the Exxon Valdez oil spill, industry after industry has suffered blows to its reputation. Big pharma was hit by its refusal to make antiretroviral drugs available cheaply for HIV/AIDS sufferers in developing countries. In the clothing industry, companies like Nike and Gap came under attack for use of child labour. Food companies face a backlash over growing obesity. And “Don't be evil” as a corporate motto offers no immunity: Google was one of several American technology titans hauled before Congress to be grilled about their behaviour in China.
So, often belatedly, companies respond by trying to manage the risks. They talk to NGOs and to governments, create codes of conduct and commit themselves to more transparency in their operations. Increasingly, too, they get together with their competitors in the same industry in an effort to set common rules, spread the risk and shape opinion.
All this is largely defensive, but companies like to stress that there are also opportunities to be had for those that get ahead of the game. The emphasis on opportunity is the third and trendiest layer of CSR: the idea that it can help to create value. In December 2006 the Harvard Business Review published a paper by Michael Porter and Mark Kramer on how, if approached in a strategic way, CSR could become part of a company's competitive advantage.
That is just the sort of thing chief executives like to hear. “Doing well by doing good” has become a fashionable mantra. Businesses have eagerly adopted the jargon of “embedding” CSR in the core of their operations, making it “part of the corporate DNA” so that it influences decisions across the company.
With a few interesting exceptions, the rhetoric falls well short of the reality. “It doesn't go very deep yet,” says Bradley Googins, executive director of the Boston College Centre for Corporate Citizenship. His centre's latest survey on the state of play in America is called “Time to Get Real”.
There is, to be fair, some evidence that companies' efforts are moving in a more strategic direction. The Committee Encouraging Corporate Philanthropy, a New York-based business association, reports that the share of corporate giving with a “strategic” motivation jumped from 38% in 2004 to 48% in 2006. But too often corporate strategy is not properly joined up. In the car industry, Toyota has led the way in championing green, responsible motoring with its Prius hybrid model, but it has lobbied with others in the industry against a tough fuel-economy standard in America. Surveys point to a big gap between companies' aspirations and their actions (see chart 2). And even corporate aspirations in the rich world lag far behind how much the public expects business to contribute to society.
According to Mr Porter, despite a surge of interest in CSR, in most cases it remains “too unfocused, too shotgun, too many supporting someone's pet project with no real connection to the business”. Dutch Leonard, like Mr Porter at Harvard Business School, describes the value-building type of CSR as “an act of faith, almost a fantasy. There are very few examples.”
Perhaps that is not surprising. The business of trying to be good is confronting executives with difficult questions. Can you measure CSR performance? Should you be co-operating with NGOs, and with your competitors? Is there really competitive advantage to be had from a green strategy? How will the rise of companies from China, India and other emerging markets change the game?
This special report will look in detail at how companies are implementing CSR. It will conclude that, done badly, it is often just a figleaf and can be positively harmful. Done well, though, it is not some separate activity that companies do on the side, a corner of corporate life reserved for virtue: it is just good business.
WHEN catastrophic floods hit Bangladesh last November, TNT's emergency-response team was ready. The logistics giant, with headquarters in Amsterdam, has 50 people on standby to intervene anywhere in the world at 48 hours' notice. This is part of a five-year-old partnership with the World Food Programme (WFP), the UN's agency that fights hunger. The team has attended to some two dozen emergencies, including the Asian tsunami in 2004. “We're just faster,” says Ludo Oelrich, the director of TNT's “Moving the World” programme.
Emergency help is not TNT's only offering. Volunteers do stints around the world on secondment to WFP and staff are encouraged to raise money for the programme (they generated €2.5m last year). There is knowledge transfer, too: TNT recently improved the school-food supply chain in Liberia, increasing WFP's efficiency by 15-20%, and plans to do the same in Congo. Balm for the soul
Why does TNT do these things? “People feel this is a company that does more than take care of the bottom line,” says Mr Oelrich. “It's providing a soul to TNT.” In a 2006 staff survey, 68% said the pro-bono activities made them prouder to work at the company. It also helps with recruitment: three out of four graduates who apply for jobs mention the WFP connection. Last year the company came top in the Dow Jones Sustainability Index.
TNT's experience illustrates several trends in corporate philanthropy. First, collaboration is in, especially with NGOs. Companies try to pick partners with some relevance to their business. For TNT, the food programme is a good fit because hunger is in part a logistical problem. Standard Chartered, a bank, is working with the Bangladesh Rural Advancement Committee on microfinance and with other NGOs on a campaign to help 10m blind people.
Coca-Cola has identified water conservation as critical to its future as the world's largest drinks company. Last June it announced an ambitious collaboration with WWF, a global environmental organisation, to conserve seven major freshwater river basins. It is also working with Greenpeace to eliminate carbon emissions from coolers and vending machines. The co-operation is strictly non-financial, but marks a change in outlook. “Ten years ago you couldn't get Coca-Cola and Greenpeace in the same room,” says Neville Isdell, its CEO.
Second, what used to be local community work is increasingly becoming global community work. In the mid-1990s nearly all IBM's philanthropic spending was in America; now 60% is outside. Part of this involves a corporate version of the peace corps: young staff get one-month assignments in the developing world to work on worthy projects. The idea is not only to make a difference on the ground, but also to develop managers who understand how the wider world works.
Third, once a formal programme is in place, it becomes hard to stop. Indeed, it tends to grow, not least because employees are keen. In 1996 KPMG allowed its staff in Britain to spend two hours a month of their paid-for time on work for the community. Crucially for an accountancy firm, the work was given a time code. After a while it came to be seen as a business benefit. The programme has expanded to half a day a month and now adds up to 40,000 donated hours a year. And increasingly it is not only inputs that are being measured but outputs as well. Salesforce.com, a software firm, tries to measure the impact of its volunteer programmes, which involved 85% of its employees last year.
All this has meant that straightforward cash donations have become less important. At IBM, in 1993 cash accounted for as much as 95% of total philanthropic giving; now it makes up only about 35%. But cash still matters. When Hank Paulson, now America's treasury secretary, was boss of Goldman Sachs, he was persuaded to raise the amount that the firm chipped in to boost employees' charitable donations. Now it is starting a philanthropy fund aiming for $1 billion to which the partners will be encouraged to contribute a share of their pay. No doubt that is good for the bank's soul.
作者: athen 时间: 2008-2-9 04:13
CORPORATE SOCIAL RESPONSIBILITY
The next question
Jan 17th 2008 From The Economist print edition
Does CSR work?
Illustration by Ian Whadcock
“THE theological question—should there be CSR?—is so irrelevant today,” says John Ruggie of Harvard University's Kennedy School of Government. “Companies are doing it. It's one of the social pressures they've absorbed.” Three years ago a special report in The Economist acknowledged, with regret, that the CSR movement had won the battle of ideas. In the survey by the Economist Intelligence Unit for this report, only 4% of respondents thought that CSR was “a waste of time and money”. Clearly CSR has arrived.
Mr Ruggie and others claim that the real question about corporate responsibility today is “not whether but how”. But the debate has not entirely vanished, and it is worth pausing to consider some of the arguments of those who question the whole point of it.
Within companies, the few sceptics still matter, especially since they seem to be found disproportionately at the top end of management. And from time to time the debate surfaces noisily in public. Last summer, for example, Robert Reich, a former labour secretary under Bill Clinton, now at the University of California at Berkeley, launched a broadside against CSR in his book, “Supercapitalism”. The CSR industry had learnt to shrug off criticism from free-marketeers such as Milton Friedman (whose seminal critique of the concept, “The social responsibility of business is to increase its profits,” appeared in the New York Times Magazine in 1970) or, for that matter, this newspaper. But here was a cruel cut from a Clintonite.
More importantly, those who doubt whether CSR is worth having raise points that have a significant bearing on how it is done. Take three of the main objections: that it encroaches on what should be the proper business of government; that CSR is a sideshow; and that it involves playing with other people's money.
Mr Reich argues that the energy spent on CSR diverts attention from establishing rules that advance the common good—rules that help to prevent oil spills, say, or protect human rights abroad. In a democracy, he says, that should be the job of elected governments, not profit-maximising companies. It is easy to see the potential for a corrupt bargain: lobby groups find it more rewarding to put pressure on corporate executives because they respond faster than governments; governments are only too happy to duck the issue or let business pick up the bill.
In practice, however, it is often the absence of government rules that makes firms feel they have to fill the void—for example, by cutting carbon emissions or setting labour standards. And as businesses go global, they face a complicated patchwork of rules. Mr Ruggie, who serves as the UN secretary-general's special representative for business and human rights, is particularly concerned about parts of the world where conflict or corruption means there is no effective government to do the rule-setting. Still, it is surely right to keep a wary eye on whether the things firms do in the name of good citizenship are truly in the best interests of society as a whole.
The “sideshow” objection takes issue with the assumption, all too common among executives and activists alike, that the pursuit of profitable business is not a socially responsible thing in its own right. Yet there is nothing wrong with making money: more than anything else, that is how companies do good. The welfare they create in the form of jobs, products and innovation dwarfs anything firms are likely to do explicitly in the name of CSR.
In 2004-05 Oxfam, an agency devoted to poverty relief, and Unilever, an Anglo-Dutch consumer-goods company, jointly conducted a detailed study of the economic impact of Unilever's operations in Indonesia. The conclusions were eye-opening, especially for Oxfam. Unilever in Indonesia supported the equivalent of 300,000 full-time jobs across its entire business, created a total value of at least $630m and contributed $130m a year in taxes to the Indonesian government. The lesson for firms is that they have been far too defensive about their contribution to society. If efforts to do good become a distraction from the core business they may actually be downright irresponsible. After all, a socially conscious but bankrupt business is no good to anyone.
Spending other people's money
The most fundamental criticism of CSR is that what executives spend on it is other people's—ie, shareholders'—money. They may mean well, and it may give them satisfaction to write a cheque for hurricane victims or disadvantaged youth, but that is not what they were hired to do. Their job is to make money for shareholders. It is irresponsible for them to sacrifice profits in the (sometimes vain) pursuit of goodness.
Thoughtful practitioners of CSR understand this. Executives overseeing the environmentally minded Plan A at M&S stress they are running a business, not a green charity. Marc Benioff, the boss of salesforce.com, is an evangelist for corporate philanthropy but keeps a clear sense of priorities: “First and foremost my shareholders are the most important thing.”
The simple solution is that businesses should concentrate on the sweet spot where initiatives are good for both profits and social welfare. This is the sort of “win-win” situation that executives love to talk about: the smart thing to do as well as the right thing to do. Green policies currently offer lots of opportunities for win-wins, which is why so many firms are eagerly embracing them: cut fuel costs and you help both the planet and the bottom line; expand your range of organic food and increase your market share. The same logic should lead senior management, faced with a bewildering spectrum of socially worthy activities, to select those that are most relevant to their business.
Yet people on both sides of the barricades tend to dismiss this argument. Sceptics say it renders CSR meaningless. If it amounts to nothing more than good management, it does not count. NGO activists, too, often look for some element of sacrifice on the part of business, if only to demonstrate a degree of moral commitment—without which, they fear, a company's worthy programmes may disappear with the next downturn.
Both arguments are too narrow. If corporate antennae are more keenly tuned to social trends and sensitivities, alerting managers to risks and opportunities they might not otherwise have spotted, so much the better for business. As for the activists, they of all people should like the idea of “sustainability”: if a business benefits from a CSR initiative, it is more likely to last, and its involvement may be more dynamic and innovative too.
To be fair, attitudes are changing, both in business and among NGOs. A growing number of companies are working with NGOs, especially those with operations on the ground and a commitment to getting things done. Both sides now see CSR as offering what Mr Porter calls “shared value”: benefits for both business and society. Georg Kell, the director of the UN Global Compact, says that the case for engagement has changed from a moral to a business one.
On this view, the best form of corporate responsibility boils down to enlightened self-interest. And the more that firms embracing it are seen to be successful—through astutely managing risks and recognising opportunities—the more enlightened their leaders will be perceived to be. But do such policies really help to bring success? If not, the whole CSR industry has a problem. If people are no longer asking “whether” but “how”, in future they will increasingly want to know “how well”. Is CSR adding value to the business?
An inconvenient truth
At present few companies would be able to tell. CSR decisions rely more on instinct than on evidence. But a measurement industry of sorts is springing up. Many big firms now publish their own sustainability reports, full of targets and commitments. The Global Reporting Initiative, based in Amsterdam, aspires to provide an international standard, with 79 indicators that it encourages companies to use. This may be a useful starting point, but critics say it often amounts to little more than box-ticking; worse, it can provide a cover for poor performers.
Sustainability rankings and indices of various kinds also help to concentrate corporate minds by shaming firms or helping them shine. But they also point to a problem. Two of the best-known indices—the Dow Jones Sustainability index and the FTSE4Good—underperform the market. AccountAbility, a British think-tank, admits to the inconvenient truth that its 2007 ranking of the Fortune Global 100 companies by their progress on building sustainability into their business shows no connection with their financial performance.
Even so, interest in socially responsible investment (SRI) is on the rise, along with the general surge in interest in anything to do with climate change. The signs are many: more executive time spent on managing relations with SRI investors; financial institutions with over $10 trillion under management signing up for the UN's Principles for Responsible Investment; an “explosion of interest” in related research, according to Peter Kinder, the president of KLD Research & Analytics, which specialises in benchmarks for social investing.
A new, exhaustive academic review of 167 studies over the past 35 years concludes that there is in fact a positive link between companies' social and financial performance—but only a weak one. Firms are not richly rewarded for CSR, it seems, but nor does it typically destroy shareholder value. Might cleverer approaches to CSR in future produce better returns?
“There is no evidence that ESG [environmental, social and corporate governance] or SRI investing on their own add value,” say analysts at Goldman Sachs. But they reckon that by incorporating an ESG perspective into their long-term industry analysis they can beat the market. Their model, called GS SUSTAIN, includes ESG analysis as “a good overall proxy for the management of companies relative to their peers”, hence indicative of their chances of long-term success. But these factors need to be put into the context of companies' financial performance and the circumstances of individual industries. A company's attention to environmental, social and corporate-governance issues is only one factor among others in determining its long-term success.
The Goldman Sachs model is an intriguing attempt to capture the complex interaction between social-responsibility issues and the many other things that businesses worry about in the real world. An integrated view of the role of CSR happens to be what leading companies are striving for too.
作者: athen 时间: 2008-2-9 04:17
CORPORATE SOCIAL RESPONSIBILITY
Do it right
Jan 17th 2008 From The Economist print edition
Corporate responsibility is largely a matter of enlightened self-interest
THE CSR industry, as we have seen, is in rude health. Company after company has been shaken into adopting a CSR policy: it is almost unthinkable today for a big global corporation to be without one. Climate change has added further impetus. Investors are taking an ever greater interest. New and surprising sorts of co-operation are springing up: with NGOs, with competitors, with other companies. The message is moving across supply chains and spreading around the world.
Illustration by Ian Whadcock
What has helped to make all this possible is globalisation—which has also been responsible for much of the general wealth-creation through which companies, let it not be forgotten, make their main contribution to society. A sudden bout of protectionism, which is by no means out of the question, could put it at risk. So activists who press for various forms of protection should be careful what they wish for. An economic recession would also be bad news for the CSR industry, parts of which might be seen as a luxury companies could live without.
But assuming that corporate goodness continues to flourish, how will things evolve? The next wave, some believe, will be one of disruptive innovation, featuring a new breed of “social entrepreneur” that will take over from the established big companies as the driving force. Mr Benioff of salesforce.com reckons that social entrepreneurs have “cracked the code” of the next generation of corporate responsibility: it will be for-profit and self-sustaining. Mr Benioff himself plumbed philanthropy into his company right from the start by committing 1% of equity, profits and employees' time as a contribution to the community.
The extraordinary wealth-creation of recent years has produced a large number of extremely rich people, many of them from the software and finance industries, who are interested in a new kind of philanthropy: a smart, capitalist kind. It involves using money for maximum impact by investing in potentially disruptive technologies (in the environmental field, for example) and in social enterprises that can be scaled up as required.
This kind of enterprise has several advantages over established big business. It has focus, rather than being a sideline, as CSR often is for large companies. It involves people who are using their own money and are interested in measurable results: “real good” not “feelgood”. It brings financial rigour as well as an appetite for risk, and it can teach the big companies a thing or two about how to measure the success of social investments.
The sums involved are not trivial. That is partly thanks to Bill Gates, who in June will leave his full-time job at Microsoft to work at his fabulously rich charitable foundation. This will aim to be giving away $3 billion a year by 2009, more than any other foundation anywhere. Money also pours in through innovative charities such as Absolute Return for Kids in London, which invests donors' money with entrepreneurs on the ground in developing countries.
The entrepreneurial model of tackling social and environmental problems is likely to stir up the CSR world. It may over time produce transformative technologies and creative new business models. But for now it is still big businesses that can make a difference. Large companies will find ways of working with—and sometimes absorbing—successful social ventures. In the next few years CSR will be mainly about “how large corporations steer a sustainable growth strategy in a very complex environment”, as Jane Nelson of Harvard University puts it.
Few leaders, many laggards
This report has looked at some of the companies that are doing interesting things, both to manage their risks and to exploit opportunities. But such examples are relatively scarce: the same few familiar names pop up again and again. Like most industries, the corporate-responsibility business has a handful of leaders, a large number of followers and many laggards.
You can recognise the leaders partly from the way they are grappling with particularly tricky issues, such as how to apply codes of practice across global supply chains or how best to convey accurate environmental information on product labels. The leaders typically have a committed CEO who champions the policy, a chief officer for corporate responsibility—or sustainability or whatever—who reports to the boss, and a cross-functional board committee to ensure that strategy is co-ordinated throughout the company. Non-financial measures of progress often play an important part in the overall assessment of the company's performance. These are companies, in short, that are seeking to “embed” CSR in the business.
Not every company can be a leader, nor should they all want to be. Being a high-profile early enthusiast carries the risk of overpromising. First-mover advantage soon passes. After a while, for example, everybody turns green, and the winners are the companies with the best execution. One large consultancy advises its big clients to be number two or three on corporate responsibility rather than number one. Thoughtful firms may pick and choose across the spectrum of CSR activities where to be ahead and where merely to comply with the rules.
The followers in the CSR industry are many. By now they probably produce a glossy report which lists numerous worthy activities—too many, in fact, when it would be better to concentrate on those that really work and benefit the business. The companies concerned may have little idea whether their carbon-offset scheme is effective or their ethical-purchasing plan costs jobs. Their real motive is public relations, and the telltale sign is that the person responsible for CSR sits in the corporate-communications department.
And the laggards? There are two types. Companies in the first group have simply failed to pay much attention to CSR; they risk being attacked as “late adopters”. Those in the second group, more cynically, think they can afford to ignore CSR, at least for now. Perhaps they are in an industry with a low profile, or operate in countries where scrutiny is minimal. They do not mind being viewed as freeloaders by competitors who spend time and money on trying to be good corporate citizens. Over time, though, this could also be risky if they find themselves subject to greater scrutiny or miss out on opportunities.
Doing what comes naturally
One way of looking at CSR is that it is part of what businesses need to do to keep up with (or, if possible, stay slightly ahead of) society's fast-changing expectations. It is an aspect of taking care of a company's reputation, managing its risks and gaining a competitive edge. This is what good managers ought to do anyway. Doing it well may simply involve a clearer focus and greater effort than in the past, because information now spreads much more quickly and companies feel the heat.
Illustration by Ian Whadcock
So paying attention to CSR can amount to enlightened self-interest, something that over time will help to sustain profits for shareholders. The truly responsible business never loses sight of the commercial imperative. It is, after all, by staying in business and providing products and services people want that firms do most good. If ignoring CSR is risky, ignoring what makes business sense is a certain route to failure.
It is the interaction between a company's principles and its commercial competence that shapes the kind of business it will be. A company that is weak on both values and commercial competence is simply a bad business. One that has strong values but is badly run, without proper attention to translating values into profits, will plainly not do well. In contrast, a company that is highly competent commercially but does not bother with corporate responsibility may work just fine, but it could also prove increasingly risky. Lastly, a combination of a strong commitment to CSR and strong commercial competence gives a good chance of success.
If it is nothing more than good business practice, is there any point in singling out corporate social responsibility as something distinctive? Strangely, perhaps there is, at least for now. If it helps businesses look outwards more than they otherwise would and to think imaginatively about the risks and opportunities they face, it is probably worth doing. This is why some financial analysts think that looking at the quality of a company's CSR policy may be a useful pointer to the quality of its management more generally.
True, much of what is done in the name of CSR is nothing of the sort. It often amounts to little more than the PR department sending its own messages to the outside world. Yet in a growing number of companies CSR goes deeper than that and comes closer to being “embedded” in the business, influencing decisions on everything from sourcing to strategy. These may also be the places where talented people will most want to work.
The more this happens, ironically, the more the days of CSR may start to seem numbered. In time it will simply be the way business is done in the 21st century. “My job is to design myself out of a job,” says one company's head of corporate responsibility.
For the moment, though, chief sustainability officers and their ilk remain in high demand. No doubt there will also be growing opportunities for ones that speak Mandarin or Hindi as the fashion for corporate social responsibility spreads around the world. And it will be quite a while yet before they all become redundant.
