Wherefore Corporate Social Responsibility?
Corporate Social Responsibility (CSR), executed using terms such as cause-related marketing, corporate philanthropy, and socially responsible business practices is often looked to by social marketers (and others in the public sector) as the lever, stick or carrot to engage the private sector in activities that improve the public good in one way or another.
Carly Fiorina, the former Chairman and CEO of Hewlett Packard made the business case for corporate social responsibility in her keynote address at the annual Business for Social Responsibility conference in November 2003.
The first is that it is simply the right thing to do. When we get involved in an area and back it with real resources – not just money and time, but also our people and products – we become a catalyst for change because governments, NGOs, and community leaders – even other companies – are then more willing to make a commitment.
The second reason to do it is that the global movement to enforce labor, environmental, and economic standards is picking up steam, and we as companies still have the ability toshape that movement and to take control of that movement before it takes control of us.
The third good reason to do this is that it’s become increasingly clear that shareowners, customers, and even employees are rewarding companies that achieve social change through business.
Finally, the fourth good reason: I believe corporate social responsibility is good for the top line and good for the bottom line; it is not just the right thing to do, it is the smart thing to do.
Kotler and Lee, two social marketers, introduced the concept of Corporate Social Marketing (CSM) in their article in the Stanford Social Innovation Review (SSI Review). Drawing on the focus of social marketing on behavior change (not simply attitudes or awareness), they distinguish CSM from other forms of CSR by describing it as “a powerful … strategy that uses marketing principles and techniques to foster behavior change in a target population, improving society while at the same time building markets for products or services.”
While these authors and others have presented case studies of successful CSR programs, there are also instances where such programs have produced unintended or paradoxical effects, such as the recently discovered practice, in some cases, of overseas factory officials falsifying records in order to appear to be in compliance with tougher corporate labor standards. [See Abasta-Vilaplana in the Fall SSI Review.]
Deborah Doane, also in the Fall 2005 issue of SSI Review, notes that the CSR movement has gathered so much momentum and as to elicit a string of articles in Economist attacking the idea and practice. In her article, “The Myth of CSR,” she notes four key ones:
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The market can deliver both short-term financial returns and long-term social benefits.
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The ethical consumer will drive change.
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There will be a competitive “race to the top” over ethics amongst businesses.
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In the global economy, countries will compete to have the best ethical practices.
Her conclusion is blunt: “CSR, in the end, is a placebo.” She advocates for regulation of corporate behavior, or an overhaul of the corporate institution, to ensure socially responsible behavior. Several initiatives are underway to examine and change the legal structure of corporations where the ultimate duties of a publicly traded company’s directors are not just to shareholders but to other stakeholders as well (communities, employees and the environment).
In the US, Corporation 2020 is premised on the view that societal expectations and needs in the 21st century demand greater corporate focus on urgent global imperatives -economic, environmental, and social. In the face of both peril and promise for the future, it is no longer enough to ask, “What is the business case for social responsibility?” Now the question must become, “What is the social purpose case for business?”
Corporation 2020 has developed six principles for corporate redesign to imbue social responsibility throughout the life cycle and operations of a company.
1. The purpose of the corporation is to harness private interests in service to the public interest.
2. Corporations shall accrue fair returns for shareholders, but not at the expense of the legitimate interests of other stakeholders.
3. Corporations shall operate sustainably, meeting the needs of the present generation without compromising the ability of future generations to meet their needs.
4. Corporations shall distribute their wealth equitably among those who contribute to its creation.
5. Corporations shall be governed in a manner that is participatory, transparent, ethical, and accountable.
6. Corporations shall not infringe on the right of natural persons to govern themselves, nor infringe on other universal human rights.
Social marketers interested in CSR might do well to turn their focus upstream rather than continue to peddle their programs and ideas to individual companies. The costs of trying to achieve the holy grail of mutually satisfying public-private partnerships among many different actors for specific issues may have short-term rewards, but the efforts might be more profitably invested in systematic change that results in long-term, sustainable corporate social responsibility across the board.
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