Four emerging trends in corporate social responsibility
08 October 2012
By any count, the world is changing faster than ever before. Human numbers are growing faster, and the impact of our activities is being felt in more and more ways. This change has profound implications for business, and means that the world of CSR - or how businesses respond to society's expectations - is at the forefront of this change. So it's worth looking for what are the current trends and where are they heading.
What drives trends in an area like CSR? Three things.
One - attitudes to business and its relationship with society are changed and shaped by outside events. These can be demonstrations of social problems that substantially change the environment within which companies do business, which are partially or wholly caused by business activities, or which businesses are likely partners in finding solutions.
These can be as diverse as extreme climate events raising the profile and public concern about climate change, right through to a run of incidences of corporate corruption. Businesses are called upon to change behaviours or solve problems because of something external to them.
Two - expert practitioners have a vision for how sustainable business should operate, and develop new ideas, or increase expertise on past experience, and implement these within the business. This defines how businesses focus their attention when the spotlight isn't particularly on them. Do they define CSR as being about philanthropy, or environmental management, or core purpose and the business model?
Three - outside agencies create a vision for the achievement of future goals, and actively recruit businesses and partners. So in recent years, the involvement of businesses in finding ways to meet the millenium development goals has been an example.
So with all these factors in play, what are some of the demonstrable trends? Here are a few that I find particularly interesting.
1. Moving from reporting to engagement
The current model of CR reporting has hit something of a ceiling in terms of the quality of data. We have spent the last ten years evolving our approach to measuring our progress and still haven't come close to the original goal - to find ways of measuring CSR in a reliable and meaningful way that enables us to compare the performance of individual companies.
Why have we hit the ceiling? Because some of the most significant information is difficult, even impossible to measure. But particularly, because the context behind the data makes it neither valuable nor reliable to use this information to draw conclusions about how well a company is doing.
And the small improvements in the integrity of the data won't make any difference to how much companies' different stakeholders actually bother to engage with it.
So some companies are now starting to focus their aim on the engagement side. Since customers, employees and suppliers generally don't read reports, companies are beginning to experiment with ways to interest, entice and even seduce those stakeholders into wanting to engage with the company about what it's doing.
It's early days for this one, but the implication of this trend is that CSR executives become less compliance focused and more involved in discussion with marketers. That is a move that is also supported by the next trend.
2. It's about the business model
More companies are starting to understand a little more about the scale of the challenge that faces us in terms of sustainability, and they're wondering what this means for their business model.
Here's the central dilemma. On your current model, if your company does very well, does that result in damage to the environment? Is the achievement of a positive outcome something you have to work hard to achieve in spite of your business process? Or can you find a business model where the better the social outcome you achieve, the better your business does in terms of profit?
It's not as though easy answers to this one jump out at you from all sides. Interface Flor carpets tried to tackle it when, for their business customers, they offered a service of professional floor covering rather than selling a thing, ie. carpet. The principle was sound - on the service model, you had the incentive to provide the professional effect with the use of the least amount of material. With the old model, you make more profit if you replace more physical square metres of carpet.
The only problem in that case was that the customers weren't ready for it. They wanted to own their carpet. Just as we all want to own our things - cars, phones, electronic household goods. Leasing was what we did when we, as a society, didn't have much money. Changing that attitude is beyond the ability of any one company, apparently.
But this one doesn't go away, so companies will keep trying to crack it, and we will see more innovation in this space. But again, it involves the marketers because you have to be able to come up with solutions where you can take your customers with you. You can be one step ahead of them and take them with you. But if you're three steps ahead, you'll lose them.
3. Finding our own identity and respect
CSR Executives have been asking themselves for some time whether they are part of a proper professional discipline or not. When AccountAbility was first formed in the late 1990s, it was styled the Institute of Social and Environmental Accountability with a view that it would become the professional body for 'accountability professionals'. That didn't happen, but we've seen the CRO in the States and the Corporate Responsibility Group in the UK tackling the same question.
There are pluses and minuses here. An acknowledged profession can establish standards of expertise for those entrusted by companies with this important responsibility. It can gain respect within corporations and increase the authority of its voice in the board room.
The potential minuses come because of the baggage that comes with professionalisation. Not to put too fine a point on it, professions usually create for themselves a series of perverse incentives. In particular, every profession builds its own jargon and sense of exclusivity - which is part of communicating to the rest of the world that this is a real area of expertise that ordinary mortals can't hope to understand. Which is why you need to hire people with the appropriately high skill level.
That's an appropriate way of being if you're happy to be in an adjunct office doing mysterious things on behalf of your employer. If you define your role as influencing across the business however, this may not be the most effective model. If we need step-changes and destructive innovation in the future - does a well-ordered profession help or hinder that?
4. Taking the role of global citizens
Businesses have aways taken an interest in influencing the public policy agenda, but historically purely from a defensive purpose of fending off potential restrictions on its ability to make profit. But as physical evidence for climate change increases and the urgency of taking action keeps pace, companies are starting to re-evaluate what is their role as change agents.
Companies are pragmatic entities, and ones that are used to defining themselves around adaptability to change. That makes them almost uniquely suited to responding to global environmental challenges.
Certainly, governments are struggling in this regard. The global economic situation has placed many of them in defensive positions where their citizens are holding them responsible for the fact that suddenly they can no longer afford the things they used to be able to. It is a difficult backdrop to take bold action in an area that many people will believe to be separate and disconnected to their current discomfort. And the fact that it isn't disconnected at all makes no difference if that's what people believe.
And, of course, in the US we have this astonishing polarisation based on party lines with a powerful segment of leaders and institutions actively hostile to science and rationality.
So we are seeing more individual business leaders prepared to make statements that are bigger, and more directly involved in political leadership than we have seen in the past. Whether Polman at Unilever telling shareholders that they don't come first, or Schulz in the US taking out full page ads calling on better governance, suddenly engagement with these societal problems is becoming more accepted as an aspect of business leadership.
It's worth noting that not all these trends are pulling in the same direction. And the fact they are emerging trends does not make their continued emergence inevitable. Some of them may well turn out to have been a momentary experiment, quickly to be abandoned.
But they are emerging because powerful forces are driving them, and although something big could happen tomorrow that suddenly changes everyone's context, by and large these forces seem unlikely to go away in the short term.
Is your company part of these trends, or should it be? If you're a CSR membership organisation, is this part of your discussion with your members? Should it be?