Let’s Fix Corporate Social Responsibility

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Corporate social responsibility has gone wrong and we can fix it 

“This picture shows all of the lights on in this giant building” a colleague said flatly. After rounds of review by many stakeholders, no one noticed this, including me, and I was leading the corporate social responsibility (CSR) report project.  How could we have all missed that picture? The report was supposed to tell a story of the company’s commitment to community, employees, and the environment. The picture’s inclusion was a big clue to the real motives and the underlying hypocrisy that fuels a lot of CSR work in corporations.

In 2019, 86% of the Fortune 500 published a sustainability, CSR, or environmental, social, governance (ESG) report- all versions of reports that share a company’s focus or impact on their community, employees, and environment. In 2011, under 20% of the Fortune 500 released a CSR report. By 2015, the number reporting was 81%. Why the huge increase? The pressure has been on and I saw that play out first hand at my former company. Customers start asking questions about a company’s impact, fueled by millennials entering the workforce in droves, a generation of people focused on meaning and purpose in life and work. Board members are competitive by nature. When some companies start doing something Board members ask why aren’t we doing that?  Why don’t we have a CSR report? We’d better get our act together. And bam, a fancy report is created with lots of attractive design, celebratory stories, data,  and tons of pictures. Argh, back to the pictures again.  Pictures that show lights on in a giant building in a section about energy savings.  

So shouldn’t all this self proclaimed do-goodery have led to significant societal impact and the resolution of societal problems? With 86% of the most successful, powerful, and resource rich companies focusing on environmental and social issues we should be celebrating major strides in ending hunger and poverty and other social justice issues, in addressing climate change, and have well funded non profits focused on providing needed services rather than fundraising. Yet we sit with ever worsening social and environmental justice issues no matter where you look. Why is that?

CSR is for marketing, not for impact.

As in my experience, many CSR reports are for show, to appease a Board or important stakeholder. The report serves a marketing purpose, a check the box exercise that allows a company to say “see, we have this”.  Since there is not a mandated criteria defining good CSR, companies can weave any story they’d like, and as long as some progress is made it’s noteworthy, publishable, and generally accepted. 

CSR is stand-alone, not embedded in the business strategy

CSR is a separate initiative at many companies, a project that needs to be updated every once in a while, not embedded into the business strategy or the decision making process. Those who work earnestly and tirelessly on CSR efforts within the company are rarely part of the senior management team and rarely report directly to any member of the C-Suite. Their ability to influence decision makers is minimal. The business strategy is void of CSR goals and even more, the C-Suite doesn’t embed CSR into the desired outcomes of the business strategy. 

CSR is based on a “give back” rather root cause  

Lots of companies brag about “giving back” to their communities. What’s inherent in this philosophy is the recognition that they took something to begin with. Most of them do take lots of things from the community and their give back is no where near equivalent to the taking. Many companies cause serious environmental and societal harm by impacting land and water resources, paying below livable wages, perpetuating social injustice within their walls, and causing chronic employee health issues. To make up for all this harm, their “give back” strategy often throws money at the non-profits where the top leadership of the company is on the Board. There’s no giving strategy, no plan, and even worse, all that giving doesn’t actually solve anything. Giving money to a homeless shelter or a hunger initiative doesn’t solve the problem of why people are homeless and hungry. No matter what the cause, this approach to funding perpetuates band-aid solutions that may be essential in the moment, but never end because we aren’t working on solving the actual problem.   

CSR is not linked to the purpose of the organization

Research and my own experience indicates that the most important work a company can do is articulate its purpose; the reason the company exists beyond making money. The purpose aims to solve a worthy problem in the world while generating profit. The profit fuels the work the company must do to solve the worthy problem. When an organization is devoted to discovering and activating their purpose, they are addressing all of the common CSR failures above. The purpose is the key component of the business strategy and by nature addresses root cause problems. Without this purpose as a compass, companies lack clarity about where or how to focus their efforts and funding. The result is a peanut butter approach to spreading their funds, from the symphony to homeless shelters to kids programs to the local United Way. Spreading money has minimal impact. Imagine if all of the Fortune 500 articulated their purpose and designed their business around fulfilling that purpose profitably, while also investing all of their community related resources and budget towards solving that program? Wow, would our world be dramatically different. 

So what’s next?

So what are we getting as a result of all this CSR reporting? We had to start somewhere with social and environmental accountability so the good news is that we’ve gotten started. The first stage of change is awareness and we’ve got 86% of the biggest companies aware that they need to talk about their social and environmental impact. Yet, the threat to progress is complacency and being satisfied with voluntary reporting as the accepted standard. As long as companies can continue to shape the narrative on their own, CSR reports will be primarily marketing.  

The next stage of our CSR evolution is accountability to a standardized set of metrics and expected progress so investors, employees and customers can easily compare what companies are doing and the impact. Additionally, companies must articulate their worthy problem to profitably solve and align their CSR efforts in the fulfillment of that purpose, while working with all of their stakeholders to determine the best balance of root case and give back initiatives in the community. 

There are authentic and transparent companies doing highly impactful CSR work and those  companies will welcome the call to declare a purpose, align CSR efforts with that purpose, and standardize accountability. Their meaningful CSR initiatives will be readily apparent to employees, customers, investors, and partners, serving as a key differentiator in their ongoing quest to be a successful business while building a better world. As investors, customers and employees we all play a role in changing how business is done through our funding, purchasing, and discretionary effort. Like many other aspects of our society today, the time to accelerate the evolution of CSR is now.

How To Build a Conscious Business

Reading Time: 3 minutes

Nowadays, businesses focused on profit do so at their own peril.  Compelling data shows that we increasingly prioritize meaning and bettering our world as key factors in deciding where to spend our money and where to work. Over the past months we’ve seen businesses doing things once thought impossible to rise to the COVID occasion, including prioritizing health over money. With the significant societal and environmental problems we have to solve, there is mass recognition that how we’ve been running businesses isn’t working and we must seek alternatives.

The Conscious Business Movement includes a web of collaborative organizations that work together to promote the elevation of humanity through business. Certified B Corps, companies practicing Conscious Capitalism, and Benefit Corporations are all a part of this movement, creating an increasingly powerful ecosystem to benefit our society, environment and economy.  No matter which path you take, there are fundamentals that every business leader must address to build a conscious business.

Why does your business exist? 

The Purpose of your business is different from your Vision and Mission and is not a marketing tagline. The Purpose is a clear, inspiring articulation of the worthy problem your business is attempting to solve in the world.  The “world” might be macro, as in Patagonia’s Purpose “Save our home planet”, or your community, as in ProsperityME’s Purpose “Empowering immigrants to succeed economically in the community”. The key is that you are singularly and passionately focused on this Purpose.  Get your team together and ask them – why do we exist?  You might be surprised about the variety of answers you get.  Defining your Purpose is the foundation of your conscious business.

What do leaders do in your company?

Anyone with any work experience knows that the way a company is led makes all the difference. A conscious business builds conscious leaders whose consistent aim is to achieve the company’s Purpose, not meet the bottom line. Conscious leaders are developed and rewarded for their many levels of intelligence – intellectual, emotional, systems, and spiritual. They deeply care for everyone they work with and holistically support people to live their best lives. Has your company articulated leadership principles and trained, supported and held leaders accountable to following those principles?  If not, you have an amazing opportunity to move further along on the conscious business journey. 

What culture are you cultivating at your company?

Culture is the most powerful lever to achieve your Purpose and business strategy. So why do so many companies leave culture to chance?  It’s often because culture feels big and amorphous and leadership doesn’t understand their culture creating role.  The saying, “As a leader you get the company/team you deserve”, is true.  Everything leadership does influences the culture.  When you have defined your desired culture then the programs, practices, policies, rewards, spoken and unspoken ways of working, the space you work in – just to name a few things – become tools to build your aspirational culture.  Ask yourself, do we have a vision for the aspirational culture and are we are working together to build it? 

How do you add value to all your stakeholders?

Every business has a bunch of stakeholders – at a minimum the employees, customers, shareholders, suppliers, community, environment.  These stakeholders are impacted by your business in a myriad of ways.  In traditional business we are trained that shareholders are the most important stakeholder.  Other stakeholders must lose for shareholders to win. Conscious businesses reject tradeoff thinking and work hard to ensure every stakeholder gains value.  COVID emphasized the importance of stakeholder loyalty. When shareholders ran, the companies surviving and thriving during COVID had stakeholders that rallied together to keep the businesses they cared about afloat in an unprecedented economic downturn.  As a start, ask yourself, do I know who my stakeholders are and how my business impacts them?  If not, now you know where to start. 

While building a conscious business is not easy, rarely is anything worth doing easy.  Building a business that everyone benefits from leaves a lasting leadership legacy.