Is CSR a Good Thing?
While searching the internet for CSR-related content this morning I saw an article on CFO.com that caught my eye called, Two Views of Virtue: The corporate social responsibility movement is picking up steam. Should you worry about it? The article appears in the December 2005 issue of CFO Magazine, and explores the value of CSR efforts in corporations as well as whether or not they are a waste of time.
“Here and abroad, consumers, nongovernmental organizations, and socially responsible investors are prodding companies to pursue a variety of social and environmental goals.
At the same time, CSR has provoked a backlash. Critics denounce the idea as wrongheaded or worse, and some argue that companies should focus narrowly on maximizing shareholder value.”
Two authors, Steven D. Lydenberg and David Vogel, were interviewed for the article and provided a fairly balanced conversation about where CSR is headed.
Lyndenberg, whose book, Corporations and the Public Interest: Guiding the Invisible Hand, “proposes strategies for making CSR an essential part of corporate management,” is fairly complementary about CSR:
“CSR is ‘a major secular development, driven by a long-term reevaluation of the role of corporations in society.’ This reevaluation, he says, is clearer in Europe, where it is commonly assumed that companies have duties to stakeholders as well as shareholders. U.S. managers may be wary of this assumption, ‘but I think that [the European] influence will be very hard to resist over the long run,’ says Lydenberg.”
I also really like the following passage the article cites from Lyndenberg’s book:
“‘Corporations create long-term wealth,’ he writes in Corporations and the Public Interest, ‘when, in addition to generating productivity gains, they preserve natural resources for future generations, create value in their relationships with their stakeholders, and do not externalize costs onto society.’”
David Vogel, on the other hand, is quite critical of the role CSR plays in various companies as well as the motive for installing them in the first place. I think Vogel makes some interesting and agreeable points though I found myself wishing he had a more positive outlook.
“Companies respond to pressures from the financial markets first and foremost, says Vogel; most of the time, CSR issues will not rank among a company’s top business risks.
“The one time CSR becomes really pressing, he says, is when a company’s brand or reputation is jeopardized — when Nike was assailed for using sweatshop labor, for example, or McDonald’s was criticized on food issues. Both companies made highly visible efforts to change some business practices and mollify their critics.”
Further, Vogel points out that CSR efforts have had a “negligible” impact on brands, claiming that CSR is rarely singled out as an “issue associated with a given brand.” Again, here I wish he were more positive. It is possible to infer that Vogel thinks CSR efforts are pointless because a company’s actions are not routinely recognized. But isn’t there merit in doing the right thing for the sake of doing the right thing?
“Overall, however, the impact of CSR on brands has been negligible, says Vogel. Surveys of the world’s top brands rarely cite CSR as an issue associated with a given brand. And companies that make most-admired lists do so by virtue of other factors — financial performance, customer satisfaction, innovation, and so on. For most investors, CSR does not factor into either their perception or valuation of companies, says Vogel.”
Vogel also makes a statement, which though it is in reference to ISO 26000, resembles the attitudes it seems some companies adopt with CSR initiatives — they are put in place simply to satiate the critics and to gain a bit of positive press:
“‘To the extent companies can figure out ways of complying with the standard at modest cost, they’ll do so,’ he predicts. ‘There are all sorts of ways to get around [such standards], and there are no penalties for noncompliance. It’s not going to be terribly effective in making companies change their policies.’”
While it is somewhat demoralizing to read such a statement, it is quite valid. I am sure many companies will seek out the cheapest and easiest means of complying with ISO 26000, because there are positive advantages to compliance, instead of embracing it as a core part of their overall CSR initiatives because it’s the right thing to do. Similarly, many companies will begin to tout their CSR departments and programs, yet most of the build-up is probably for show.
When I finished the article the first time I was left feeling somewhat frustrated. I think there are plenty of strong examples of companies that are promoting their CSR programs but clearly are not embracing the true meaning of ‘corporate social responsibility’. However, after I read the article a second time and had a moment to think things through, I decided that there is some value in pushing CSR issues in a company, even if compliance is minimal and no further efforts are made.
Some effort is better than complacency. Sure, it would be great if all major corporations immediately stopped everything and overhauled their operations and goals in an effort to be better corporate citizens, but for now, even a little bit of progress should be recognized as an achievement. Complete participation, and a genuine passion for becoming better corporate citizens, has to get its start somewhere. Let’s just make sure this train doesn’t stop.
TAGS: This entry was posted on Friday, March 17th, 2006 at 1:37 am and is filed under Books and Films, Business Ethics, CalPoly MBA, Corporate Social Responsibility. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
March 17th, 2006 at 4:15 am
You are right, Peter. I am not sure if these pieces truly understand CSR was you do; plus there is nothing wrong with embracing it. Further, even a small effect on the business is worth its implementation, in my book, even if it is about future-proofing it.
¶ We know that more and more consumers favour CSR, and what happens when these conscientious Gen Ys get into the workforce and start calling the shots? Their ability to Google and mine data will reveal who’s genuine, and who’s a phoney.
¶ Finally, CSR has long-term effects: not just with these young consumers of today, but the nations that are helped with our programmes will be grateful to us in future. If we help a nation with its infrastructure, when they become consumers, they will buy from us.
¶ To take a snapshot of a few years might not paint CSR in a positive light, because its effects are not measureable by conventional means.
March 17th, 2006 at 12:34 pm
Jack: Excellent points!
Another reaction I had to the article was that I was somewhat disappointed with its overall tone and viewpoint. CFO Magazine’s audience, presumably, is made up of some fairly powerful individuals, and while I appreciated reading an article with more than one viewpoint, I wonder if the same content could have been presented with a bit more responsibility. The positive or negative forward movement such an article can have (especially when it is most likely read by quite a few powerful CFOs) is fairly daunting.
Just as the article chose to use the subtitle “The corporate social responsibility movement is picking up steam. Should you worry about it?” an equally powerful but positively motivating one could have been used. For instance, something that conveys the same overall image of the content to follow (a compare and contrast of CSR’s pros and cons) but then pushes a positive pro CSR stance. Conversely, the “Should you worry about it?” question pushes a somewhat negative CSR agenda. If I were a busy CFO and skimmed the article, I’d have a hard time forgetting the subtitle and would most certainly come away feeling fairly ambivalent to CSR in general.
Why not push a more positive agenda? Why choose such a powerful, and in my opinion negative, sentence to tack on the end of the subtitle? I don’t know about anyone else, but the first time I read the article, my hackles were raised from the moment I saw the subtitle. My reaction was one of consternation for asking such a question in the first place — of course you should worry! Do more! Make your company’s CSR agenda one of it’s core agendas, if not THE core agenda! Worry that your company is not doing enough! — yet I think many will unfortunately come away from the article with the ambivalence I mention above.
I’d be interested to hear your opinion about the power of editorializing or setting an agenda in a publication, Jack. I tend to subscribe to the idea that the more power you wield, and the larger your following, then the greater your responsibility to do the right thing. I would put a magazine such as CFO in that camp as well as any other publication with a circulation greater than 1 or 2. …and then inevitably we get into a discussion about balancing the growth of a business and the challenge of sticking to your ideals. Have you faced similar issues in the past with Lucire?
April 10th, 2006 at 7:16 am
I am working on a public technology project called the Open Architecture project. We are advocating a broadening of IT policy statements from the F500. The impact of this work upon digital divide issues is imminent and immense.
We offer a good ROI for the enterprise, however, not mission critical. We have had two implementations stall, one in the F100 and the other F500 due to pushing up through IT and not coming down via the business driven initiaitive.
We are now stepping back and including our global ROI and have begun researching this arena of CSR. I have an excutive brief on this project and wanted to request a review and feedback.
If that would be ok I can forward the brief with your email reply.
Thank you, Mark Moore
Chief Analyst - the OA project
April 10th, 2006 at 8:24 am
These debates about the business case for CSR have made me think a lot about whether this is a fad or the future. I just wrote a blog on this very topic at http://csr.blogs.mcdonalds.com. I am optimistic that we are on the upswing of CSR as a mainstream part of our future…mainly because I see it coming with our up and comng business students.
Bob Langert
Senior Director, Social Responsibility
McDonald’s
April 10th, 2006 at 1:02 pm
Mark,
Thank you for the request – I replied by email and look forward to receiving the executive brief.
Peter
April 10th, 2006 at 1:26 pm
Bob,
Thank you for the comment! I recently noticed that McDonald’s is an approved Ceres company and have been meaning to check out your CSR initiatives for a few weeks. Thank you for stopping by and reminding me to renew my interest.
I think there is a risk of any new movement becoming a fad, regardless of how much traction it seems to have at the moment. I think it speaks to human nature and how fickle we are that seemingly out of nowhere everyone seems to be talking about carbs or Yoga or business ethics, yet given enough time, those same individuals will instead be gabbing about soy or Pilates or CSR.
Similar to you, I also wonder if all of the buzz about CSR, corporate governance, and business ethics will merely transition into the next hip business topic. Obviously, I am hopeful that such initiatives not only stick around for a while but also become central factors and guideposts for corporate success.
While I applaud corporations for creating CSR initiatives (and making the related information easily accessible – kudos to McDonald’s), to a certain degree, I believe that society and consumers have as much a hand in the initiatives’ success as the originating corporations do. At the same time, I am optimistic about the power large corporations, such as McDonald’s, can channel toward making CSR and related issues more successful.
Peter