Is Corporate Social Responsibility (CSR) dead?

We regularly attend Cass Business School events on Corporate Social Responsibility, ethics, social impact investment and the like. Always interesting both for the speakers and the networking opportunities. In their Cass knowledge March newsletter they highlight an interview with Peter Flemming, Cass Professor of Business and Society, about his new book “The End of Corporate Social Responsibility”. The provocative title made me think about the whole issue and here I present a few thoughts and conclusions of my own.

The interview below, and indeed the book itself, is food for thought and in many ways chimes with our view of the use (or abuse) of terms and concepts such as this as a sticky plaster or superficial lacquer on an organisation without fundamentally changing (or even examining) core business practices. Indeed the same could be said for the term corporate governance itself, with lip service and box ticking being the norm to comply with stock market listings and provide kudos for the marketing department.

Flemming is also right in this assertion that “much of the basic axiomatic aspirations of CSR (industrial democracy, sustainability and the so-called ‘triple bottom line’) are at serious odds with the general tendencies of global capitalism”.

However, I feel in general that this pessimistic (and inevitably academic) view ignores some important facts and trends that give cause for hope – without which there is certainly no chance of achieving real change.

What has Corporate Social Responsibility ever done for us?

It seems appropriate (if unoriginal) to use Monty Python’s famous Life of Brian scene to debate whether CSR has helped or hindered the social impact of business. Sadly, I can’t see a similar result in terms of a flood of benefits that challenge the question heading this post.

However, I would reflect on the similar ongoing debate in quality management and standards through the likes of ISO 9000 and the “new” responsibility standard ISO 26000, a key tool in CSR, of course.

I have always argued that for all the kudos-grabbing, marketing spin that certified organisations might employ, the fact is that as consumers we generally  have far more reliable products and better organised companies than we did 30 years ago when the industry began. Driven initially by a need to reduce the number of returns by customers, it lead to a systematic evaluation of the way in which goods are manufactured and subsequently the way services are delivered to customers, providing an audit trail of what has happened so problems can be traced. While the  core motive is clearly self-serving, we have benefitted as consumers (built-in obsolescence aside, perhaps). My point is that without these standards and self-interest to drive change,  we would still be taking our cars to the garage every month or sending back our faulty appliances half the time. I would argue that Corporate Social Responsibility is a similar case in point. While it may yet prove more dangerous than helpful, if people weren’t even talking about it I believe we would be in a far worse situation.  Self-interest drives CSR – and everything we ever do Let’s be realistic: we all operate out of self-interest to a greater or lesser extent. Even dedicated volunteers and my own passion to drive change and make a difference is motivated by a core need inside us – helping and making a difference is what drives us and we feel good when we are able to achieve it. Let’s not fight it, but try and align self-interest with the interests of the community and the planet.

A businessman reaching out the globe as used in corporate social responsibility reports Images such as this are commonplace in Corporate Social Responsibility initiatives. Cass Business Schools’s Peter Flemming describes it as a terrifying, rather than hopeful image. I would certainly agree that it is, at best, a generally insincere attempt to connect a business with socially-/environmentally-aware consumers. I disagree that all such images are bad in themselves, though – Many use children’s hands and soft colours and for me these represent a more innocent and caring vision; it is their use that devalues or contorts their effectiveness, but I am still tempted sometimes to use images like the one below.

After all if, as Flemming argues, Corporate Social Responsibility is a busted flush or worse, a step back, what is the alternative? I for one, refuse to throw in the towel, to use two idioms in one paragraph: as a wonderful comment on a Word Reference forum says, for the poker player whose flush is busted, there’s always another hand – the poker player keeps on trying. And while I don’t like using “fight” in my endeavours, the boxer can get up, wipe himself down with the towel and carry on – success, they say, is being knocked down seven times and getting up eight.

Social Enterprise: an antidote for CSR woes?

Clearly the best way to solve a problem is to think outside the box and come at it from another angle. As Einstein said, you cannot solve a problem from the same level of consciousness that created it. He also said that the definition of insanity is doing the same thing over and over again and expecting different results.

Finding a new way is what millions of social entrepreneurs around the world are doing with increasingly spectacular results. Consumers have long been disillusioned with big business and traditional ways of operating and many – even believers in the free market economy – feel that capitalism itself is broken. Social entrepreneurs are not simply tapping into this demand in the way that CSR programmes often do. They are a new breed who often use a different company structure to ensure their social mission is guaranteed whilst pursuing a sustainable profit-driven agenda.

For example the emerging Benefit Corporation in the United States is, as Ben Schreckinger wrote in “Virtue Inc.” in the Boston Globe, “required by law to create ‘a material, positive impact on society and the environment,’ and — while still making a profit — to consider the effects of its actions on its customers, its employees, society, and the environment.”

I won’t go into detailed definitions of social enterprise now, but simply point out that some definitions do actually include charities and NGOs whose “profits” are their reserves, the Royal National Lifeboat Institution arguably being an incredibly successful example of operating a commercial business model to fund its life-saving efforts in a not-for-profit structure (charity).

Social Value: accounting for social impact in mainstream business

While I personally believe social enterprise will become increasingly important in the global economy as more and more become aware of and choose these businesses over conventional corporations, there are other ways to change mainstream business. Dealing a new hand, if you will.

One such way is social value. Pioneered by the SROI Network, (standing for Social Return On Investment), it seeks to increase equality and decrease environmental degradation by changing the way society accounts for value.

Karl Richter, from EngagedX, a “social impact investment” company, reckons that what is needed to bring social impact methods into the mainstream is precisely to remove the confusing labels (hence him crossing out “social impact” on his blog, which I have reproduced here), so it becomes clear we are simply talking about measuring ROI, but in a more comprehensive way. By simplifying the message he attempts to adhere to a quote he gives from General Colin Powell who once said “Great leaders are almost always great simplifiers, who can cut through argument, debate and doubt to offer a solution everybody can understand”.

This is what, after all, has happened with the more formal regulated approach via new accounting standards, so if SROI can be more clearly defined, while being comprehensive enough to be useful, it should be no more complicated (Generally Accepted Accounting Principles) over recent years.

Real change comes through a top down and bottom up approach: strong leadership with grassroots support via two-way communication. We argue throughout the site that corporate governance itself should not be a separate function but part of the bones and bloodstream of the organisation.

By integrating SROI (via “SGAAP”) into an organisation’s normal operations and regular reporting, social value may stand more of a chance of avoiding the graveyard to which Corporate Social Responsibility may soon be heading.