CR or CSR?

Corporate Responsibility or Corporate Social Responsibility?

I touched on this briefly in my introduction post and wish to explain my thoughts behind this right now. Looking at the triple bottom line (economic, social, environmental impacts) no business can survive without being sustainable across all 3 fronts, however since we are people and no business can survive without people to buy from, sell to, or to employ; personally my take is that the social aspect is the most crucial and the most important.

The Economic impact is important because it provides income to people, who can continue to work for the business, or impact on other stakeholders who are also people. The environmental impact is important because without it, many of the inputs required for business (water, electricity, air) would not be there, and people would not be able to survive. Its all about people.

Thus I prefer to keep the term CSR, to make sure that every business is specifically focused on the people around them. I also want to mention the term social entrepreneur: the idea of creating a business that explicitly has social and financial benefits. This business aims to solve a social issue, but without needing to be a charity, and as it makes money, it can scale-up its business much easier than a charity.

I am aware of the controversial nature of this CSR stand-point, since the trend seems to be towards Corporate Responsibility, Corporate Citizenship, Business Responsibility and so forth. In many cases the term is not important, it's what you actually do as part of this work that is important, however in other cases the term is important since it defines what is done. Personally I don't believe many businesses do accurately explain what they mean by CC or CR or CSR -I think its important, since it means stakeholders have a better understanding of the motivation behind the work, the intended consequences and so forth. In a World where trust is so lacking and transparency and dialogue so crucial to success, explaining crucial differences in terminology (maybe crucial is too harsh a word, but in come circumstances it can be a crucial difference) can make a difference to how successful the business's CSR, and indeed the entire busienss is.

Thus my standpoint is for responsible leaders to recognise the impact of decisions they make on definitions early on; justify those decisions and thus not be surprised by the impacts. If a company think CSR is philanthropy its because there is a mis-understanding of what CSR is, that's because no-one ever explained what it actually is to the company. I don't believe there is a universal definition of CSR. Every business must interpret it in its own way -but not enough businesses are going through this important process of interpretation.

CSR is about strategy

Although you could look at CSR as common sense (and justifiably so), I prefer to look at it from a strategic perspective. From most of the people I have spoken to they can grasp what CSR is, but they still cannot quite grasp how it can be implemented strategically to the company's advantage.

Actually I find that most people have different definitions of strategies anyway, and unless you are at the head of an organisation, you never really get to really think about 'what a strategy is'. I believe a strategy is an idea of how to take the organisation forward. Normally I find that a strategy is just the detailed description of achieving a goal. This is important for sure, and maybe can be called a strategy -in which case my definition of a strategy can be looked at as a strategic strategy.

A Strategic strategy is thus a strategy that is often new, most definitely long-term thinking, definitely involves some kind of changes and should be related to the nature of comparative advantage. Comparative advantage is the notion of how your organisation can be better than the competition. This requires identifying what the company has that others don't (it could be a certain patent, it could be a certain person, specific resource, or just an idea) and then exploiting that advantage to push the organisation ahead (it thus also requires an alaysis of who the competition are and what they are doing, as well as a similar internal analysis). A Strategic strategy is a strategy that specifically aims to ensure the company's growth and sustainability long-term, it looks to exploit an opportunity.

I think you'll understand what I mean if i continue with how I see CSR as a strategic strategy. A bad understanding of CSR is the notion of CSR as charity. A better understanding of CSR is the notion of CSR as new market opportunities or as comparative advantage. An excellent example of the former is GE's ecomagination initiative and of the latter is the Co-operative Bank. Briefly explained, GE wants to make more money whilst making the World a better place and the Co-operative Bank attracts more customers because it refuses to invest in certain companies, sell its products to certain customers and does a lot of other ethical/enviro-friendly initiatives in order to build its brand as distinct from its competition.

However, this is still not how I see CSR as about strategy (although both companies may actually see it my way, I don't know). I see CSR starting from the question how a company can be more responsible; and realising that a company must operate responsibly. But ideally if the company has positive impacts on society then it must ensure that the company continues to have that positive impact and thus continues to exist and increase that impact. Thus CSR is about the future, about building a sustainable business. From this premise the company needs to look at how it can survive and how it can grow and how it can continue to do this responsibly. This is the ultimate aim of CSR.

Below this the focus can be on the company's triple bottom line impacts, on its processes and operations, on its stakeholder engagement and so on. First companies must see CSR as a top line strategic strategy, then they can see how their processes can support this. Then they can look at what else is needed -such as how can we distinguish ourselves, how can we be more flexible, opportunist and creative. These ideas need to be thought through because they support the ultimate strategy of creating a lasting, responsible enterprise. Certainly these aspects are the core of CSR, but until the employees view these aspects as part of the broader, ultimate strategy, they will never quite understand CSR. They will continue to see just one of these aspects (Health and Safety for example) and most unfortunately they will fail to recognise that their HR activities, their reporting/accountability processes and more are a crucial part of CSR.

Since CSR is about doing good business, responsible leaders should understand this concept -of strategy and how CSR is related to that. Most importantly leaders should ensure those they are leading understand this. CSR should be used as a fad, as an excuse to drive an organisation forward, as a focus for generating ideas and improvements to the company: Ultimately as a way of bringing diverse ideas and components of an organisation together with the goal of making the organisation more sustainable.

responsible companies with irresponsible products

No company or organisation does no harm at all. every time we use up energy for example, we are harming the environment to some extent. The world is so complex that supply chains are enormous, and no organisation can operate without using paper, electricity etc.

All of these products somewhere along the line are harming the environment, but yes, some products are more harmful than others -arms and cigarettes some of the worst, but then many arms are used for peaceful means (well, some are, not that i am defending the industry!)

the way business works is complex -for example Altria makes cheese as well as cigarettes... so what do you say about that company? BAT employs over 100,000 people providing them and their families with livelihoods for example, so there is no easy solution.

what do i think? i think organisations exist because there is a demand for them. what they should do is behave ethically as they meet that demand. in extremes that often means reducing demand (eg. not advertising for cigarettes), but it needn't be. Governments can create the framework defining ethics (it could ban arms, but does not).... when society deems a company unethical then eventually the government (in a functioning society) will act (maybe cigarettes will be banned at some point). The good thing is that it will take a long time for the governments to act, depending on corporate lobbying, sufficient public pressure and evidence... thus during this time the corporation will either die or diversify and hopefully those beneficiaries will find other work etc.

Leaders in these controversial organisations (like any other organisation) should strive to behave ethically, but this will always be within boundaries -human defined boundaries, boundaries that move, boundaries that vary per person. Those boundaries will differ individually and define what is and is not a good product or company. Leaders should strive to consider the impacts of their organisations and maximise the benefit to society and their organisation at the same time. Its not easy -being a leader is not. Ethics is not black and white. Pick a shade of grey. Pick the shade that you are comfortable with. How do you define responsible?