'Corporate social responsibility': a wobbly concept

'Corporate social responsibility' is sometimes smart business, but it's always difficult to define. What social responsibilities do corporations bear? What should they?

When academics, pundits and corporate heavy hitters take the stage to debate semantics, who wins? That question weighed heavily in my mind during last week’s “Great CSR Debate,” an event hosted by PR Firm Fenton and instigated by Professor Aneel Karnani’s controversial Wall Street Journal Op-Ed, “The Case Against Corporate Social Responsibility.”

As the webcast beamed out live to an audience of over a thousand viewers, thought leaders including The Economist’s Matthew Bishop, ThomsonReuters’ Chrystia Freeland, UN Global Compact’s George Kell, BSR’s Aaron Cramer, Campbell Soup’s Dave Stangis and GE Foundation’s Bob Corcoran argued about concept that evidently means different things to different people. As moderator of the debate, my intent was to “navigate” the conversation to the point where a “side” would “prevail.” But within the first few minutes, I realized why efforts in this direction were futile.

“What do we mean by corporate social responsibility (CSR)?” asked Karnani. “It’s not just that the terminology is clunky. It is also unclear.”

Indeed, it is unclear. According to a study published by Wiley InterScience, there are approximately thirty-seven different definitions of CSR floating about the business world. This problem is compounded by dozens of competing CSR or sustainability-related measurement and certification programs. Do well-meaning corporations adopt Cradle-to-Cradle or B-Corp standards? Should they join the Global Compact or Social Accountability 8000? Do Fair Trade or Ethical Trade models make the bigger difference? Who knows?

What we do know is that the old-school CSR rhetoric utterly fails to resonate. At least that was something both sides could agree on. “The problem with the rhetoric is that it can create confusion about what a business is doing in it’s core, versus what it likes to talk about or claim public credit for,” said Freeland, who pointed to campaigns issued by BP, PepsiCo and Goldman Sachs as examples of marketing hypocrisy.

Beyond the language and clear instances of greenwashing, however, there was a deeper point to be made, particularly by practitioners on the panel. When so-called CSR is most effective – when it generates so much value for stakeholders and shareholders that corporations cannot afford to stop investing in it – then it is no longer regarded as CSR, but good business strategy. GE’s multi-billion dollar investments in clean energy and affordable health care stand as a testament to this.

“If you label CSR or corporate citizenship as purely a philanthropic activity, then I agree that’s misguided,” said GE’s Corcoran. “[Authentic CSR] is about the core of what a business does, how it does that, and what it sells that is of value, that helps to meet unmet needs.”

Campbell’s Soup’s Dave Stangis agreed. “CSR is there [at Campbell’s] not because it’s nice to do, but because it makes the company better. It takes money from the supply chain, makes us more nimble and drives innovation.”

Still, despite the demonstrable move toward CSR-driven business models, Karnani insisted that corporations have no obligation to solve society’s ills. “That is the role of government regulation,” he said. “Governments are a far more effective protector of the public good than any campaign for corporate social responsibility.”

Here is where a second key distinction lies. It is one thing for corporations to conduct business ethically – trading within boundaries set by law. However, it is quite another thing for corporations to use laws as a strategic compass. Those that do will be playing catch up forever.

There is also the matter of our transformed society. “We don’t live in a world where government’s only job is to set and enforce rules and businesses only job is to sell products and services within those boundaries,” said Cramer. “We live in a transparent world, a globally connected world, a world where civil society plays a big role, where global markets exist but global governance does not.” Despite the clunky language, today’s CSR is fundamentally about collaboration, which means getting to optimal solutions faster than if we waited around for regulation or business to advance independently, Cramer explained.

“What is really going on here is a struggle to determine what tomorrow’s markets are going to be in a world that’s changing very fast, where all the old boundaries are breaking down,” said Bishop. “Now we’re all workers, consumers, capitalists and voters. And we’re trying to work out the right institutional arrangements to govern in that new world.”

So where does the “Great CSR Debate” leave divided minds? Perhaps right back where they started, or perhaps pondering the following choice: respond to the new reality, or don’t. Stangis put it this way: “This isn’t a debate about right or wrong, winning or losing. For me, it’s about changing the world, one company at a time – or sitting on the outside describing why that can’t happen.”

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