Now that formal adoption of corporate social responsibility (CSR) policies has become widespread, the question becomes whether they are living up to their purpose and promise. Many companies are not fully cognizant of the strategic importance of CSR until they end up getting attention for looking socially irresponsible. The upside of PR snafus is that they often give companies the impetus they need to change their focus. According to an article in Global Finance, “some of the organizations most vilified over the years by human rights and environmental campaigners—companies such as Wal-Mart and Nike—have become enthusiastic cheerleaders for CSR.”
The role of CSR is changing and evolving quickly as sustainability issues are making it to the forefront of the public arena. If the first phase of CSR's development was based heavily on philanthropy and public relations, that is now giving ways to a more interactive, stakeholder-driven model. CSR is becoming an intrinsic part of a company’s core business and values.
Sustainability initiatives can help companies break into new markets. The problem of how to reduce one’s footprint and do less environmental harm can actually become part of the solution. The challenge of sustainability often serves as a catalyst for companies to develop innovative solutions and create significant new markets. For example, if a company wants to identify its core initiative as future protection of forests, it requires not only generous financing, but also a new market in terms of monitoring, assurance, project management, adaptation and communications.
The new paradigm for the generation of CSR programs is to make sure one’s charitable efforts and business goals are in alignment. The serendipitous benefit is that both the businesses and the charities stand to gain from this approach. When companies choose issues that they feel passionate about and can authentically get behind, they get more bang for their buck. Plus they tend to be more involved and engaged for the long term.
Metrics and Reporting
As the practice of CSR becomes more structured, the next emerging challenge is the lack of standards against which companies’ performance can be measured. Although companies at the cutting edge of CSR create ambitious targets and try to find the resources necessary to reach them, some critics are concerned that because the targets are self-imposed they are often arbitrary and difficult to compare from one company to another. The goal is to develop universal citizenship standards, which will help investors, customers, regulators and the companies themselves assess their performance on an absolute and a relative level.
As CSR gets interwoven into the fabric of a company’s core mission, the people on the front lines are recognizing the need for better metrics to measure impact. It’s exciting to watch the CSR discussion move from the periphery to the center of the public’s attention. To keep it front and center, corporate citizenship has to become less part of a vision statement and more part of the nuts and bolts of the business plan.