Is Corporate Social Responsibility Good For You?

During a recent presentation I made to a business association, I was asked what I thought about “corporate social responsibility” and its importance to businesses.

I believe that corporate social responsibility is too often regarded by businesses as an “add-on”, instead of an integrated part of the way they do business. Instead of viewing CSR merely as an outreach or charity donation by people at work (frequently seen as making people feel a bit better about their work, or helping the community to feel better about that business), look at how you can BE socially responsible through your corporate business.

In the wake of BP’s disastrous oil spill (and the death of workers) in the Gulf of Mexico in 2010, no amount of donating to charities for their CSR could compensate for their inability to promptly contain the disaster and for their CEO’s apparent inability to demonstrate actionable sympathy for the victims and the local environment. It simply wouldn’t make an impact on the business, the people, or the public to be sponsoring homeless shelters. (BP actually has laudable statements about their support of human rights and their impact on local communities.) However, if actions and risk policies and procedures had consistently demonstrated sufficient care about the impact of their work, they potentially could have had much better containment and would have been able to reduce the amount of environmental and social impact of the Deepwater Horizon drilling explosion.

If you think historically about the very nature of business, then you realise that businesses were by and large founded as community ventures – they were part of their local community, partnered with locals and were by nature invested in what happened in the local community. Multinational companies frequently play havoc with that model, as it is easier to escape local consequences. It is also one of the reasons that MNCs often try to project a beneficent flavour into their local presence. (The East India company helped precipitate the American Revolution by undercutting local Boston tea merchants. Would the US exist if the East India Co had had a robust CSR arm?)

Most people don’t go into business in order to fleece people and rip off the local population. They go into business to achieve something meaningful and valuable, increase their standard of living and provide for the future. Unfortunately, this gets lost too often in the daily cut and thrust.

Laure Bassi, CEO of McBassi & Co., is a US economist who has been studying the impact of human capital on market value of publicly listed companies for quite some time. She recently published a book titled Good Company: Business Success in the Worthiness Era. In it, she demonstrates that companies are generally higher performers that:

  1. Are rated high in the management of their people,
  2. Provide value and service to their clients, and
  3. Demonstrate stewardship of their environment and resources – using their “core capabilities” to consistently benefit the community.

I see these, more simply, as demonstrating an external focus. Be concerned about how your actions, policies, remuneration, use of resources, etc. affect your people, clients and community and you will be working towards creating greater value all round.