Corporate Social Responsibility isn’t just blah blah..

The Mckinsey Quarterly and its on-line siblings are simply brilliant. They reflect and polish the image of the firm, are well researched, thorough, very useful, and a pleasant read. (Would be even better if the site was RSS enabled)

It is easy to be cynical about CSR, see it as nice padding in the annual report. There is more too it than that though.

Being Political Science graduate who somehow ended up in the software industry, I have always had an interest in the relationship between corporations and society. Much of my university time was spent discussing the complex relationship between capitalism and apartheid. (It isn’t as simple as it first seems.)  At least in the South African economy, a firm grasp of socio-political issues and their implications, together with action is key to business success. The Milton Friedmann business of business is business argument just doesn’t wash back home.

It is also being challenged elsewhere too. Read what the Management guru Henry Mintzberg has to say.  and the discussion at Harvard here. 

Back to Mckinsey: they recently published a series of articles on CSR (when social issues become strategic), and they are well worth reading. I found the MD, Ian Davis, especially enlightening. He says…

  • The case for incorporating an awareness of social and political trends into corporate strategy has become overwhelming.
  • Issues such as privacy, obesity, offshoring, and the safety of pharmaceutical products can alter an industry’s ground rules, and the financial and reputational impact of mishandling these issues can be huge. But they also create new market opportunities that nimble companies can exploit.
  • Companies should look for signs of emerging hot topics, be ready to respond to them early, and place a series of small strategic bets that will create value if the social and political landscape shifts.
  • CEOs must be willing to ensure that different parts of their own organizations are united behind a coherent approach, to engage in external debate, and to consider collaboration with others.

The survey also makes compelling reading   see exhibit 4 for the key issues. (It is a fancy flash graphic which has so far defied my attempts to link to it)   The report notes.

Executives around the world overwhelmingly embrace the idea that the role of corporations in society goes far beyond simply meeting obligations to shareholders, according to the latest McKinsey Quarterly global survey.But executives also say that, for most companies, sociopolitical issues—such as environmental concerns and the effects of offshoring—present real risks. Indeed, finding ways to control them is so important, the executives say, that the effective management of sociopolitical concerns must start with the CEO.

While looking through Technorati I found an Interesting post  about what Timberland do.This is what the  CEO of Timberland, Jeff Schwartz  has to say:

And so, where it was once a great risk for business to step up and engage in matters of social justice, environmental stewardship and global human rights, it’s time to take a greater risk – to step outside our comfort zones and work to make our impact in these areas in ways that are stronger, deeper, more powerful and more thoughtful. It’s incumbent upon us to do this for two reasons:

We have the ability. If we, as businesses, applied the same level of innovation, passion and determination to corporate social responsibility as we do to product development, sales and marketing, the results would be phenomenal. And why shouldn’t we? In the business world, “good enough” rarely is; we’re always working to make it better. There’s no reason why the standards should be any less for our CSR efforts.

The world desperately needs it. Never before has the notion of sustainability been so prevalent – the idea that we must consider the consequences of our actions not on tomorrow, but on the world we leave behind for generations to come. And while making a conscious effort to reduce our negative impact on the environment and our communities is a good first step, doing “less bad” isn’t enough. We’ve got to start doing more good – to try to repair some of the damage that has already been done and invest in positive, sustainable change.

Some of my questions, (more to follow someother time)

What are the issues software companies should be focussing on? Sun has recently started marketing eco-servers. Is this just a cynical, irrelevant ploy, or will they become the Toyota prius success story? Should the industry concerned about the impact that computer processing has on energy demands? Should software designers care about this too? Can programs, like light bulbs, be more energy efficient?

Privacy and security were ranked #5 on the list. Should software companies be doing more in these areas? If so what? Loss of privacy is an externality that is currently not adequately regulated for – will this change? What about Google and other search players? I’ve mentioned this before.

What are business schools doing to educate future leaders? Is the focus too much on quantitative stuff, and the shareholder primacy dogma?  This is a criticism that Henry Mintzberg has leveled here. (more on this another day) How should ethics and CSR be taught and researched?

What tools and measures are needed to report on CSR? how can we be transparent without undermining competitive advantage? How can CSR actvities be communicated to broader society and the market in clear, hype-free, believable language? What standards should be used to measure CSR?

Is the Global Reporting Initiative,  GRI, the answer? (GRI’s vision is that reporting on economic, environmental, and social performance by all organizations is as routine and comparable as financial reporting.)

I have recently read Sumantra Ghosal on Management, A force for good. He was a brilliant management thinker, and he provides a thought provoking challenge to management theory. He challenges the greed is good mentality and suggests that a lot of management theory is based on incorrect assumptions about humanity. 

Part of the reason why this is on my mind is that I’m organising our 1st Chief HR Officer roundtable at the moment, and the theme is “Employee Engagement and Sustainability in Europe.” If you would like to find out more, drop me a note. Thomas[dot]Otter[at]SAP[com]

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9 thoughts on “Corporate Social Responsibility isn’t just blah blah..

  1. Actually good old Milty is not too far wrong afterall: note the controlling phrase in the piece ‘within ethical custom’. In 1970 something when he wrote this the US was in the midst of the cold war and any corporate social anything was seen as an almost subversive influence threatening to sap capitalism. I believe it was right then and still is to ask the democratic mandate question as it is important to mainatin a healthy public/private sectoral balance. Now that the cold war is over, globalisation era is here, and as corporations globalise to face intractable global problems, what exactly is our ‘ethical custom’?

  2. Thomas:
    I was thinking I just posted something similar as well on systematicHR. There’s actually a great link between process efficiency, environmentalism, and employer branding if companies choose to market this way. It’s not a bad thing and can be an effective spin on what’s getting implemented anyway.

  3. I’d love to agree with you on this Thomas and maybe you’re right in theory. The reality is that companies’ attention to issues of governance and CSR is pitifully weak to say the least. I tooko the trouble of reading all the way through Sage’s stuff. Not a single word of substance anywhere.

    I’ve banged the ethics drum long and hard at my place, usually taking a bettering in the process. When ethics and economics meet – as is the case with offshore tax havens – then you have a debate with meaning. Blethering on about sweatshops, the ozone layer and the rest just doesn’t have the same impact.

    If you’re thinking ‘engagement’ there’s been some good studies recently that say engagement is more important than relationship. I see that as a ‘belonging’ issue but then I worry about corporate culture.

  4. Dennis,
    Read the Mckinsey study. I dont think it is blethering. Also look at things like the kimberley process, ethical extraction, BP,P&G, IBM etc. The clever companies are realising that they cant abdicate the maintenance of the social fabric to the state when they operate in a global world. Ethical investment is growing too. Ask your VC friends about green.

  5. Thomas:
    CSR is very much a topic for the business school at Columbia. I was involved with the Social Enterprise program (http://www2.gsb.columbia.edu/socialenterprise/) which sponsors a myriad of events, conferences, discussions and papers around this topic e.g., Corporate Social Responsibility & Sustainability Paper Awards. Prof. Ray Horton heads the program. I’m happy to reach out to him if you’re interested in getting more information at some point.
    Columbia has also set up the Sanford C. Bernstein & Co. Center for Leadership and Ethics which has worked to incorporate, among other ethical topics, CSR into the core curriculum.
    Ok, that’s enough plugging of the alma mater, but I really feel that Columbia has been at the forefront of these issues among MBA programs.

  6. Mark
    This is good to see. I’m convinced that in many parts of the world, “big business” has a crisis of legitimacy. If global companies are to thrive in the long run, they need to do more than just focus on quarter by quarter revenues.

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