Why Has Corporate Social Responsibility Stalled?
CSR has come a long way in a very short time. But while CSR remains a high priority, social performance has been lackluster and corporate leaders want to know how to increase the value of their investments in this area. In this context, it’s no surprise that Fast Forward is the theme of Business for Social Responsibility’s 20th Annual Conference that takes place in New York this week.
I had the opportunity to speak with Aron Cramer, President and CEO of BSR, about some of the challenges and opportunities that corporations face in this area. Here’s an edited summary of a long conversation I had with Aron about the state of CSR today:
Paul Klein: On the one hand, we don’t need to talk about the business case for CSR anymore. On the other hand, being “responsible” isn’t having the impact it once did. What do you think corporations ought to be doing to increase the value of their CSR efforts?
Aron Cramer: There is still a long way to go to fully integrate social, environmental, and governance questions into business strategy and operations. In BSR’s 20th Anniversary Report we identified four areas that we think are really important in terms of getting more traction and having more impact. The first is to continue to integrate CSR at the core of business with accountability systems. We also believe that the essence of sustainability needs to be fully integrated into the way markets work so that the short-term considerations that currently dominate our financial markets diminish because you eliminate barriers to greater progress. The third thing we talked about is looking at systems change – the need to look at how whole systems operate and how to embed CSR in these systems. Finally, businesses need to take advantage of the way our society is changing. Individuals are more empowered and connected than ever before and companies need new ways of communicating with and engaging the public.
Paul Klein: Governments don’t have the resources or bi-partisan support needed to effectively address social issues, non-profits are embracing an enterprise approach, and corporations have added a social dimension to their businesses. Roles are shifting but we’re not getting the results we need in terms of real social change. In this context, how far are corporations willing to go in terms of being genuine agents of social change?
Aron Cramer: The era of strict divisions between different sectors of society is over. The world is being shaped more and more by essentially hybrid organizations: businesses that look to have a positive social impact, governments that understand how they can leverage markets to achieve broader social gains, and NGOs that are looking to partner with businesses. There are many examples of companies that are focusing not only on what they do within their daily operations but also the broader changes they would like to see. For example, at Unilever, CEO Paul Polman has spoken about the need to get rid of quarterly reporting and forecasting so that companies can think more about the long run. For decades,Levi Strauss has talked about human rights and civil rights and the role that business can play there. GlaxoSmithKline is working to increase access to medicine throughout the world.
Unfortunately there are still too many examples of the absence of flourishing rule-based societies. For example, many mining corporations operate in countries where the rule of law is not applied in a fair way by local governments. But we see more and more companies stepping up to say that’s exactly what they want to help build. And they are willing to use their voice not only in terms of what they do as businesses but also in terms of building coalitions to try to improve the conditions in which they’re operating.
Paul Klein: I’ve found that most corporations believe that being too responsible is a business risk because it will increase scrutiny of their operations by the public and by other stakeholders. What are the right ingredients for getting past this perception of risk and taking CSR to a level that has real impact?
Aron Cramer: Ultimately, I think this is about companies finding the social principles and priorities that align with their self-interest. We need to speak up to shift the terms of the game to ensure that human rights are protected within our operations, to make sure we make wise use of water and energy and make sure we have the systems in place to do that. Some companies such asWalmart have said repeatedly, that they can compete on any rules so let’s have some rules that provide the outcomes we all want, and then we’ll go out and compete on that basis.
Paul Klein: Can you elaborate on the changing role of government in terms of creating a more consistent platform for corporations in this area?
Aron Cramer: Many of the issues that are at the core of the sustainability agenda are global issues. However rules and laws are primarily set by nation-states. Governments operate within national boundaries, so finding rules that can be applied globally are crucial. That’s why we’ve seen such great uptake on the UN Guiding Principles on Business and Human Rights that John Ruggie put together. Companies have been hungry for global benchmarks to understand what it is they should be doing with respect to human rights. Now there is a global benchmark that companies can apply no matter where they’re doing business. Unfortunately, we have a lot of transnational issues that are still being defined within national boundaries.
Paul Klein: The vast majority of economic value is created by small and medium-sized businesses that don’t have the knowledge or resources to operationalize CSR. Is there an opportunity to engage small and medium enterprises (SMEs) in CSR and deliver social results on a scale that dwarfs what we’re seeing now?
Aron Cramer: I think that SMEs have a huge role to play and it may be that they have even more interest in seeing the rules clarified and evened out. They have fewer resources with which to create their own solutions and they will be much better served if there aren’t big environmental problems, big human rights violations, massive poverty, lack of education, and lack of social infrastructure. Although SMEs don’t always have the resources to formalize sustainability, every business has employees, and thinking about how they are treated is crucially important. Every SME depends on having access to water and energy that is sustainable and clean so this is an issue of importance everywhere and also a big opportunity.
Paul Klein: Corporations are starting to recognize that the social outcomes of business investments are as important as the business outcomes of social investments. Are more corporations measuring business results and social outcomes?
Aron Cramer: I think this is an area that is still very much in process. Companies are better able to measure their investments than they are their impact. For example, if you think about a company that’s investing in education, the inputs to ensuring that the educational systems operate effectively are very complicated: they involve public sector, private sector, socio-economic factors, and so on. There’s a lot of work going on and it’s an area of real importance but I’m not sure I can point to anyone who has totally nailed this one.
Paul Klein: What’s your vision of how to put CSR in Fast Forward?
Aron Cramer: Looking back over the last 20 years we see very positive developments: poverty has been reduced, more and more companies have stated commitments to sustainability, energy efficiency has improved, and consumers have access to a lot more information. But we’re not moving fast enough towards addressing climate change. In fact, climate change seems to be going faster than a lot of experts felt that it would. Biodiversity continues to diminish. In our range of objective measures, we are actually going in the wrong direction.
We know where we need to head: in the direction of a lower carbon economy that delivers sustainable prosperity for a planet that will have 9 billion people by the middle of the century. We have a rough consensus on the broad vision, whether expressed through the Millennium Development Goals or the new Sustainable Development Goals that will likely be developed within the next couple of years.
The question is no longer where should we be heading but how we should build systemic solutions that will enable us to get there. For example, delivering the food, water and energy that people really need can’t be done though a pilot project. You have to do that through systematic efforts that look at public policy, consumer behavior, and the way companies make investments. We think that by looking at those systemic solutions, we can accelerate progress. We can push this forward and get to the sustainable prosperity for all that we’d like to see over the next quarter century.
In thinking more about my conversation with Aron I started to think that the term “social responsibility” may have had its day. Perhaps we’re at a crossroads and need a new language around the relationship between business and social change that better captures the need for systemic solutions.
This week a global community of more than 1,000 leaders from business, civil society, and the public sector will be participating in BSR’s annual conference. According to BSR, “Awareness on sustainability has now entered the mainstream of business. The challenge today is to turn the vision of a just and sustainable world into a reality.”
I’ll be attending the conference this week and expect a lively debate about the future of CSR and what it means to put it in fast forward.
You can follow me on twitter at paulatimpakt.
This blog post originally appeared on Forbes.com. Distributed with the permission of the author.
Paul Klein founded Impakt in 2001 to help corporations become social purpose leaders and is considered a pioneer in the areas of corporate social responsibility.
Paul has helped Fortune 500 companies and other large corporations including BC Hydro, Canada Post, The Co-operators, De Beers, Hain-Celestial, Home Depot Canada, McKesson, Nestlé-Purina, National Bank, Petro-Canada, Pfizer, RONA, Shoppers Drug Mart, Starbucks, sanofi-aventis, and 3M to improve the value of their social purpose programs. Paul has also helped many leading non-profit organizations to build shared value partnerships with corporations.
Paul is a regular contributor to Forbes, has served on the Advisory Council of the Queen’s School of Business, and has been a featured speaker for organizations including the Aboriginal Human Resource Council of Canada, Association of Canadian Advertisers, Conference Board of Canada, Canadian Business and Community Partnership Forum, Canadian Stewardship Conference, and the Sponsorship Marketing Council of Canada.
Paul is regularly featured in the media as a corporate social responsibility source, was included in the Globe and Mail’s 2011 Leading Thinkers Series, and was recognized as one of America’s Top 100 Thought Leaders in Trustworthy Business Behavior.