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My CSR Heresy – Retire "CSR”; Instead, Call It The Coming New-Normal Business Model

Submitted by: John Paluszek

Posted: May 06, 2015 – 06:00 AM EST

Tags: csr, b corps, esg

 
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The recent news that a second B Corp -- Etsy, Inc. -- has just gone public prompts this “CSR” tipping point meditation:

Open letter to "Corporate Social Responsibility": You've served us well for several decades, but now it's time to go. Having been involved with you since the 1970s, parting is painful -- but necessary. So many companies around the world have integrated the near-genius concept of doing-good-while-doing-well into their DNA that your distinction no longer resonates.

Anyway, the central concept of “CSR” (nee sustainability, etc.) is just further evolution of capitalism that's been going on for decades, even centuries. Think of how companies have evolved in the U.S. through the Progressive Era, the New Deal and Ralph Nader and friends.

Today -- and tomorrow -- in an interdependent, inter-connected and inter-active world of many kinds of stakeholders, any notion of a "CSR department" is obsolete. Granted, there has to be a steward of so vital a management function and that steward must operate at the interface of the company and its many stakeholders. But the panoply of current business-in-society commitments has to be owned and operated by everyone in the company.

It's a business model for our times.

OK, there's a lot of equity in "CSR". Think tanks and data banks are full of it. Conferences --- national, regional and global -- are seemingly constant. Many business schools teach it. There are “CSR trade media”. Many dollars (and other currencies) are attached to it. Some non-profit organizations even include it their names.

So retiring “CSR” will take time. That's acceptable. For a while we can live with simultaneous articulations -- as long as we understand that company reputation and brand (think soft assets on the balance sheet), risk management, market development, human resources and board fiduciary responsibility are in play here. And let's not overlook the trust and respect every institution in society seeks.

Just how well is the “CSR” concept entrenched as a business model? Let us count the ways – actually only some of ways:

  • Certified B Corps -- companies giving social and environmental progress at least the same priority as profits – now number over 1,000 in the U.S. and in 32 other countries.        
  • Some 8,000 companies around the world are members of the United Nations Global Compact, agreeing to operate in concert with the Compact’s ten principles clustered in environment, human rights, labor rights and anti-corruption . Many of the companies “partner” with non-governmental organizations, governments and academics in pursuit of such “ESG” (environment, social, governance) objectives. Combined, that brings Global Compact affiliations to 12,000 and growing https://www.unglobalcompact.org/.
  • “CSR” is also industry-specific with competitors cooperating to apply such criteria to their business operations. Many such alliances, call them “CSR trade associations” if you will, range from the banking industry’s “Equator Principles” to the mining industries’ “Extractive Industries Transparency Initiative”.
  • The ESG concept has intellectual heft. Business schools around the world are teaching the next generation of enterprise leaders the importance of meeting stakeholders’ emerging social expectations and demands. The Global Compact “Principles for Responsible Management Education” (PRME) system reportedly serves some 595 such educational institutions.
  • There are very influential derivatives of the core ESG concept. A prime example: The principle of “Shared Values” championed by Harvard University’s School of Business Professor Michael E. Porter and Mark R. Kramer http://www.sharedvalue.org/about-shared-value . Also on this business-model radar is the “natural capital” operating philosophy; in this iteration a growing number of visionary companies are acknowledging that certain “externalities” -- i.e., the effect of economic activity on natural resources -- should be valued and integrated into sustainability commitments http://www.naturalcapitalcoalition.org.  
  • And then there is the all-important investment community. Admittedly, social impact investing is not yet a swing factor for most investment markets. But neither is it incidental, especially among long-term investors such as institutions. The U.S. Sustainable Investment Foundation’s 2014 “Report on Sustainable Investing Trends in the U.S.” concludes: “US sustainable, responsible and impact investing (SRI) has grown substantially … to $6.57 trillion at the start of 2014 … These assets now account for more than one out of every six dollars under professional management in the United States” www.ussif.org/trends

Importantly, Millennials are especially receptive to these ideas. After all, youth shall inherit the earth.

Add it all up and there is good reason to believe that, long term, “what goes around …” really does come around, in that business has long been a truly social institution: For starters in this symmetry, go back to the 18th century and Adam Smith, beloved of capitalists: “He is certainly not a good citizen who does not wish to promote, by every means of his power, the welfare of the whole society of his fellow citizens.”

Well said, Mr. Smith.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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