Corporate Social Responsibility (CSR) is all about taking responsibility for the impact your business has – not just on your customers but on your stakeholders, employees, local community and the environment at large. While it has gained huge momentum and endless lip service since the 1980’s, it remains a controversial concept.
One of the main arguments against CSR is that businesses are owned by their stakeholders and any money spent on social responsibility is effectively theft from shareholders. Shouldn’t it be up to them if they want to give to charity?
And what about the pressure it puts on smaller, newer companies who need to focus all their efforts on their core businesses to survive? Has corporate responsibility evolved beyond being the luxury of the super secure to being a fundamental part of any future success of a business?
It seems so. Despite the dissenters, CSR is a fundamental part of business culture and there’s a growing emphasis on the quality of what you do, rather than simply whether you do it at all. A statement of intent won’t win you much credibility in the face of rigorous benchmarks of quality, established to measure the impact and outcome of activity, such as the Dow Jones Group Sustainability Index and BITC’s Corporate Responsibility Index.
The Food & Drink federation, the industry sector body, has brokered one of the most recent major CSR initiatives. Currently, the food and drink sector accounts for around 10 per cent of industrial water usage. A group of major food companies have pledged a reduction in water usage as part of an overall package aimed at cutting their environmental impact. The group of 21 firms, including Cadbury Schweppes, Nestlé UK, Premier Foods and Tate & Lyle, said that they aimed to cut water usage by 20 percent over 12 years.
The latest Corporate Responsibility index, a cross-sector ranking produced by Business in the Community, shows that FMCG and major retailers are doing their bit. J Sainsbury, John Lewis Partnership, Marks & Spencers and Tesco all score over 95% and are credited with being committed to corporate responsibility at the highest level, incorporating social and environmental issues into all strategic decision making.
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Beyond the industry, Salesforce.com is often quoted for its CSR policy of giving 1% of its profit (in the form of products), 1% of its employees' time, and 1% of its equity to charities and other non-profit organisations. Google has recently adopted the same policy.
Inevitably, there are also examples of major companies leading by bad example – Enron won awards for its CSR policy and gave millions to local charities. In 2006 its chief executive was jailed for 24 years on multiple felony charges.
Does CSR become irrelevant if the nature of the business is dishonest or morally questionable? All the major cigarette manufacturers have extensive CSR policies but do the ethics of their product put the value of their CSR policies into question, or is it just about doing the right thing?
Despite the philosophical debate surrounding CSR, the concept is undoubtedly here to stay. And for all the bad examples and criticisms, the great majority of CSR cases appear to be having a sincere and positive impact, not only for the wider community, but for the companies themselves.
CSR is firmly established as a core business issue, not just for multinationals but for the smaller, newer companies too. It has become a process by which businesses manage and build their relationship and reputation with stakeholders and customers. Across the world it is of growing importance to how businesses make their money, not just whether they give some of it away
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