Blog for Lloyds Bank Centre for Responsible Business, University of Birmingham, December 2020
When you hear the phrase ‘Corporate Social Responsibility’, what do you think of? The three most common interpretations of the phrase are so varied in meaning that the words have lost the right to validity. This case was first made in academic literature in the 1970s, when the acronym ‘CSR’ was already twenty years old.
Understanding #1 is how businesses would like you to perceive it: the phrase shows that a company is thoughtful, engaged, responsible, sustainable, cuddly – perhaps that’s going too far. For some companies, happily a growing number, that image is both true and convincing, but in too many cases scratching the surface exposes a lesser truth…
Understanding #2 at least has the benefit of being honest. The company in question has a standalone CSR operation which focuses on volunteers raising money for charity, with corporate encouragement. It is typified by collecting tins, paint brushes, a few laughs on the annual ‘CSR day’ and far too much skin-tight lycra. The outcomes, if any, of such activities are short term, transient, voluntary, superficial. The impact isn’t usually measured, but the £££ look good in the annual report. As a banker said to me once ‘CSR’s like a fax machine: everyone knows what it’s for, everyone’s wondering why it’s still here.’
Understanding #3 is perhaps the most worrying, because 99 percent of all UK businesses are SMEs. According to my research of a few years ago the prevailing attitude of SMEs to CSR was ‘It’s corporate social responsibility, we’re not corporates. It’s got nothing to do with us.’ And yet these companies did engage with their local communities, sometimes profoundly, because it felt like the right thing to do. It wasn’t strategic in operation, often not even planned, but it did add purpose and meaning to the business and enhanced their employee engagement. Or it would have done, had they measured it.
‘It’s corporate social responsibility, we’re not corporates…
nothing to do with us.’
None of these three understandings is satisfactory. The best practitioners understand this, now ditching ‘CSR’ and talking about ‘Sustainability and Responsibility’ or another alternative term. #1 comes closest to describing what the best intentioned companies do but the message is diluted by those whose commitment is partial, who adopt a ‘greenwashing’ approach. Some companies abandon their good intentions when the going gets tough. Here’s what CSR should mean (if it applied to everybody, see #3):
The company knows that it has both positive and negative impacts on society, its stakeholders
and the environment. It actively aims to maximise the benefits it produces and minimise
or mitigate the harm it creates in fulfilling its purpose.
We might add ‘and has the governance capable of delivering this’, the ‘G’ of ‘ESG’. This is not a huge challenge. Get the mindset right, the leadership in place, the understanding of where the company sits in relation to its stakeholders and the rest will follow. But it gets better: by defining a company’s purpose in positive and responsible terms, and clearly striving to achieve it, the business gives the employees a reason to get up in the morning over and above the need to earn a wage. That engagement feeds productivity, credibility and the consequential brand loyalty.
Every company has an impact. Every company measures its inputs, outputs and outcomes so that they know where they stand. ‘Traditional’ CSR measures only inputs: we gave so much money, we volunteered so many hours – so what changed? The company measures change in every other aspect of its work, so why not measure the good – the social value – that it creates, too?
If you need a roadmap, try the SDGs – the United Nations’ Sustainable Development Goals. They were written with business in mind. Many of the best corporate company citizens already use these 17 themes as a template for reporting impact – as does the Global Reporting Index.
And there is nothing wrong with engaging in ‘CSR’-type activity that benefits the company, either: in fact, it should! If a young employee spends time listening to children read perhaps it will improve their patience, their listening and people skills; designing a web site for a local charity might be just the challenge another employee needs to give them confidence and presentation skills. These benefits make volunteering (in this instance) sustainable. If it doesn’t work for your company, why do it?
Which brings us full circle, back to the name. If what we are talking about isn’t CSR, what is it? ESG is great, but it emanates from the dry vocabulary of investment. Polysyllabic words have their place (sustainability and responsibility have six each!) but the term needs to be more user friendly and inclusive, so ‘corporate’ is out.
My preferred term is ‘Company Citizen’. A company is a legal form which includes corporates, SMEs, social enterprises and even charities. A company is also a social organisation. Being a citizen, after a moment’s thought, describes a balance of rights and responsibilities; exercising those freedoms allowed under the law, tempered by duties to others and a sense of self-discipline. A decent citizen thinks of the future, not just the present, and is motivated by factors other than, or in addition to, money.
‘Company Citizen’ tells you all you need to know about an organisation. It is an active, a doing role; it matures and progresses. It plans, maps out its future in a proactive way in order to achieve its mission. It has values and a sense of purpose.
‘Corporate Social Responsibility’, without qualification or explanation, really has become meaningless. To too many people it means ticking boxes or opting in to temporary activities separate from the normal course of events. ‘CSR’ has come to mean ‘Charitable Superficial Response’. Let’s leave it behind, stuff it behind the fax machine and move on.
Our communities, nations and planet desperately need company citizens to work with other social organisations in government and communities, across the whole planet and on many fronts. As SDG17 recommends.
It’s time for all citizens to step up, to serve.