This article explains why firms must refocus their CSR activities on this fundamental goal and provides a systematic process for bringing coherence and discipline to CSR strategies. Our findings were remarkably consistent.
Other key findings are below. Rather, most companies practice a multifaceted version of CSR that runs the gamut from pure philanthropy to environmental sustainability to the active pursuit of shared value. But although many companies embrace this broad vision of CSR, they are hampered by poor coordination and a lack of logic connecting their various programs.
Although numerous surveys have touted the increased involvement of CEOs in CSR, we have found that CSR programs are often initiated and run in an uncoordinated way by a variety of internal managers, frequently without the active engagement of the CEO.
To maximize their positive impact on the social and environmental systems in which they operate, companies must develop coherent CSR strategies. This should be an essential part of the job of every CEO and board. Aligning CSR programs must begin with an inventory and audit of existing initiatives. Assigning CSR activities accordingly is a crucial first step. Programs in this theater are not designed to produce profits or directly improve business performance.
Examples include donations of money or equipment to civic organizations, engagement with community initiatives, and support for employee volunteering. Examples include sustainability initiatives that reduce resource use, waste, or emissions, which may in turn reduce costs; and investments in employee working conditions, health care, or education, which may enhance productivity, retention, and company reputation.
Programs in this theater create new forms of business specifically to address social or environmental challenges. Improved business performance—a requirement of initiatives in this theater—is predicated on achieving social or environmental results. Instead of using its customary wholesaler-to-retailer distribution model to reach remote villages, the company recruits village women, provides them with access to microfinance loans, and trains them in selling soaps, detergents, and other products door-to-door.
More than 65, women entrepreneurs now participate, nearly doubling their household incomes, on average, while increasing rural access to hygiene products and thus contributing to public health. Its success has led Unilever to roll out similar programs in other parts of the world. As Project Shakti demonstrates, theater three programs need not be comprehensive. Theater three initiatives almost always call for a new business model rather than incremental extensions.
Although each CSR activity can be assigned principally to a single theater, the boundaries are porous: Programs in one theater can influence and complement those in another or even migrate. Thus, while it was not designed to drive business results, it may end up doing so and as a result migrate to theater two.
Similarly, activities in theater two may give rise to new business models and thereby migrate to theater three. This aggressive goal is driving the development of new business models to close the post-consumer recycling loop. IKEA will have to radically alter how it designs furniture and, even more important, devise new models for collecting and recycling used furniture. Companies seeking to coordinate established portfolios should begin with step one, which emphasizes rationalizing the programs within each theater.
Companies building their first portfolios should start with step four, which focuses on developing an interdisciplinary strategy. While it may be unsurprising that CSR programs are often poorly coordinated across theaters, our research reveals that poor coordination is common even within theaters.
Thus the initial step for many firms is to bring coherence to the existing programs in each theater. The Bitterns in Rice project is an example of exemplary CSR practice and serves as proof of the compatibility of rice farming with environmental biodiversity and a healthy environment.
The group is managed by WA farmers and conducts trials and research on best practice farming techniques for the benefit of its members. Jointly funded by its members and several government and private sector groups, the group also conducts training programmes, including: Women in Ag , aimed exclusively at empowering women in agriculture, through agri-business training and professional development.
Another CSR programme is the Cropping and Natural Resource Management Programme , which is designed to address issues that are pertinent, not only to farmers, but to the management of soil health, disease and weed resistance. Since soil health and weed management are both critical environmental issues, the Facey Group research is of significant benefit both to its members and to the broader community.
Corporate social responsibility is not only the domain of large corporations and multi-national businesses. Small- to medium-sized Australian business enterprises also have the capacity to benefit their respective communities. Many already do so without formalised CSR policies or procedures. Furthermore, small- and medium-sized businesses are often best placed to facilitate local-level CSR programmes, as they are more deeply embedded in their communities.
All these practices are forms of CSR and are easily achievable. Initiating a formal CSR programme can also have significant financial benefits for local businesses, as well as their communities. An effective CSR programme can enhance the reputation of a small business, involve it more deeply in its community and ensure the loyalty of local consumers; all of which can produce positive, long-term financial outcomes. Across rural Australia, examples of small- to medium-sized local businesses practising effective CSR are plentiful.
The Commitment To The Environment And Sustainability: While CSR is often more synonymous with people-based initiatives these days, your commitment to the environment and sustainability remains a core element.
Often, it is these changes that, while seemingly small, can have the largest impact as a collective whole. In showing a desire to help equip communities around you with the skills needed so that the community thrives, you will ensure that your company will thrive too. It will have more access to the skills and knowledge it needs, more relevance in the market, and more intimacy with its stakeholders. If every business were to genuinely and authentically accept the five commitments above, we could achieve dramatic change across people, industries and the globe.
At degrees, it boils. And with boiling water comes steam. And steam can power a locomotive. The one extra degree makes the difference.
The one extra degree in CSR can truly make all the difference if we commit to making CSR a strategic must-have versus nice to have. Forbes Communications Council is an invitation-only community for executives in successful public relations, media strategy, creative and advertising agencies.
Do I qualify? The benefits of CSR speak volumes about how important it is and why you should make an effort to adopt it in your business. Her favourite article is How to Plan a Bake Sale.
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