Are Companies Making the Most of CSR Initiatives?

For companies that see CSR as an opportunity to strengthen the business, the big challenge is execution. Smart partnering can provide a practical way forward.?

So often, executives have viewed corporate social responsibility (CSR) as just another source of pressure or a passing fad. But as customers, employees, and suppliers—and, indeed, society more broadly—place increasing importance on CSR, some leaders have started to look at it as a creative opportunity to fundamentally strengthen their businesses while contributing to society at the same time.?They view CSR as central to their overall strategies, helping them to creatively address key business issues. The big challenge for executives is how to develop an approach that can truly deliver on these lofty ambitions—and, as of yet, few have found the way. However, some innovative companies have managed to overcome this hurdle, with smart partnering emerging as one way to create value for both the business and society simultaneously.

Smart partnering focuses on key areas of impact between business and society and develops creative solutions that draw on the complementary capabilities of both to address major challenges that affect?each partner. In this article, we build on lessons from smart partnering to provide a practical way forward for leaders to assess the true opportunities of CSR. There is no single accepted definition of CSR, which leads to plenty of confusion about what constitutes a CSR activity. We can begin to develop a working definition of CSR by thinking about its dual objectives—benefiting business and society—and the range of potential benefits in each case.?Many businesses pursue CSR activities that can best be termed pet projects, as they reflect the personal interests of individual senior executives. While these activities may be presented with much noise and fanfare, they usually offer minimal benefits to either business or society. In the middle are efforts that can make both sides feel good but that generate limited and often one-sided benefits.?

With philanthropy for example, corporate donations confer the majority of benefits on society (with potential but often questionable reputational benefits to the business). Similarly, in what is best referred to as propaganda, CSR activities are focused primarily on building a company’s reputation with little real benefit to society. Some cynics suggest that this form of CSR is at best a form of advertising—and potentially dangerous if it exposes a gap between the company’s words and actions. None of these approaches realise the opportunities for significant shared value creation that have been achieved through smart partnering. In such ventures, the focus of the business moves beyond avoiding risks or enhancing reputation and toward improving its core value creation ability by addressing major strategic issues or challenges.?

For society, the focus shifts from maintaining minimum standards or seeking funding to improving employment, the overall quality of life, and living standards. The key is for each party to tap into the resources and expertise of the other, finding creative solutions to critical social and businesses challenges. Initial questions for any leader should be, “Where have you focused CSR activities in the past?” and, more important, “Where should you focus them for the future?”?

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All organisations have to balance limited resources and effort, so the challenge is how best to deploy yours to maximise the benefits to your business (and your shareholders and stakeholders), as well as to society. What are the objectives of our current initiatives? What benefits are being created, and who realises these? Which of these initiatives helps us to address our key strategic challenges and opportunities? Companies are likely to have activities scattered across the map, but that is not where they have to stay—nor is it how the benefits of CSR are maximised. Many companies start with pet projects, philanthropy, or propaganda because these activities are quick and easy to decide on and implement. The question is how to move toward CSR strategies that focus on truly creating value for the business and society. The accompanying examples suggest three principles for moving toward this goal.

Concentrate your CSR efforts. Management time and resources are limited, so the greatest opportunities will come from areas where the business significantly interacts with—and thus can have the greatest impact on—society. These are areas where the business not only can gain a deeper understanding of the mutual dependencies but also in which the highest potential for mutual benefit exists. Build a deep understanding of the benefits. Even after selecting your chosen areas of opportunity, finding the potential for mutual value creation is not always straightforward.?

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The key is finding symmetry between the two sides and being open enough to understand issues both from a business and a societal perspective. Find the right partners. These will be those that benefit from your core business activities and capabilities—and that you can benefit from in turn. Partnering is difficult, but when both sides see win– win potential there is greater motivation to realise the substantial benefits.

Relationships— particularly long- term ones that are built on a realistic understanding of the true strengths on both sides—have a greater opportunity of being successful and sustainable.

Applying these principles to choosing the appropriate CSR opportunities prompts additional questions—namely:

What are the one or two critical areas in our business where we interface with and have an impact on society and where significant opportunities exist?or both sides if we can creatively adjust the relationship?

What are the core long- term needs for us and for society that can be addressed as a result?

What resources or capabilities do we need, and what are we offering in realising the opportunities??

Article by Tracey Keys , Thomas Malnight , Kees van der Graaf

Exctracted from The Responsible Citizen Magazine December 2016 - Issue # 1 / Volume 1?