Why Corporate Social Responsibility Can Harm Your Business and What To Do About It

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The Guardian Sustainable Business section offered an article by Sandra Macleod, CEO and founder of Echo Research in 2010 on the shifts in CSR as perceived by executives in global companies. The synthesis is that, “Only companies that put corporate social responsibility at the heart of their business will continue to prosper.”

As Macleod says, “in the early days of corporate social responsibility (CSR), it was enough to plant a few trees and attend the odd ribbon-cutting junket or photo opportunity… So long as profits rolled in, customers — and shareholders — were satisfied. CSR-associated activities were seen as ‘bolt-on’, rather than critical to business. Indeed, our research shows that in 2000, only 11% of CEO’s believed CSR to be integral to improving commercial success. Occasional CSR activity was enough, in a world where sustainable practices were seen as just another PR-related function.”

Fast-forward: Global media attention has skyrocketed, trust and reputation are directly linked to sustainable practices, and both have an immediate, measurable impact on the bottom line. Clearly, the days of superficial “green-washing” are behind us, as evidenced by Echo’s recent study A World in Trust, analyzing trends and practices in global CSR. Working with the International Business Leaders Forum (IBLF), Echo’s survey of over 50 global business leaders included Diageo’s Paul Walsh, Coca-Cola’s John Brock, and Whitbread’s Alan Parker CBE among others, to analyze the latest thinking and insights in CSR. The qualitative data was complemented by business media content collected by media search engine Echo Sonar, and then scrutinized by Echo’s analysts:

Our findings tell the story of a shifting landscape. Stakeholder research, feedback and co-creation are seen as key elements, while stand-alone CSR departments are in steady decline.

Indeed, an astonishing 96% of those surveyed told us that sustainability efforts needed to be integrated into their respective strategies and operations. Furthermore, 88% believe that businesses should demand similar commitments from suppliers.

This shift in thinking is an excellent piece of research and very good news to those who care about a healthier planet and world. But this is only the beginning and not the end.

There are two big challenges, now that executives have discovered sustainability and responsibility must be integrated into business. The first is to ensure it is how they do business, as they do business and not a separate set of work, even if all departments are involved. It cannot be managed via a separate department or as a way to “give back.” It must be integral, not just integrated. The difference is it is everyone’s work and how everyone thinks about their daily choices and decisions. It is pervasive to The Regenerative Business.

The second big challenge is that many sustainability initiatives can damage a brand and in the meantime not even work on what really matters. Most initiatives, even when seeking integration, are driven by “best practices” which are copied from other businesses and are not generated from the business’ distinctiveness. This means they are not unique initiatives, therefore not integral to the business. As a result they tend to homogenize the brand with others in the same industry.

Businesses need to start instead with discovering the essence or uniqueness of a company and connecting that essence to global imperatives (areas they can and do effect in the ecology and communities). For example, Seventh Generation, a non-toxic household products company, has always been transparent in human relationships and in sharing their financial information with the employees and suppliers. In realizing that this was unique to them, they determined to move forward the field of sustainability by make their own ingredients fully transparent as a way to educating consumers on their buying choices, as well as educating others on how to do so (including Walmart). As a result they enhanced their own brand while producing meaningful change in the ecology movement. They created a new way to talk about sustainability which is leading the way in their industry.

Choosing a distinctive and simultaneously effective way to contribute, gives an opportunity to accelerate the distinctiveness of the brand as they do good in the world and to find unique ways to contribute meaningfully. Without this, the likelihood of diminishing the distinctiveness of the business is high and the rate of return on doing what really matters is lower. Copying best practices is bad for the brand and bad for real impact on the planet and in communities.

Originally published at carolsanford.com on December 13, 2010.

Sr Fellow Social Innovation, Babson | Best Selling/Multi-Award Winning Author | Regenerative Paradigm Educator

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