The Evolution of CSR

We have moved from 'doing the right thing' through CSR to 'doing good things', but perhaps we should be concentrating on 'doing valuable things' with it, writes Jim Reed. 

For many people CSR, or Corporate Social Responsibility, is one of those woolly management phrases that sits alongside ‘sustainability’ and ‘well-being’. For others in the corporate world CSR can be a useful tool, and for some it’s become a guiding ethos. 

Whatever your view, it can no longer be ignored. 

CSR has certainly moved beyond its original inception of simply ensuring a company was compliant with compulsory laws, taxes and regulations to a broader, more voluntary role of acting responsibly towards stakeholders; customers, shareholders, staff and the community. 

In other words, it has morphed from simply ‘doing the right thing’ into ‘doing good things’. 

The narrowest contemporary understanding of CSR has companies doing things for these audiences that they otherwise wouldn’t be driven to do through profit motive, such as charitable giving, sponsorship, lessening environmental impact or ethical sourcing. 

But many of these activities are far from purely philanthropic; and our research shows that savvy punters often don’t see them as such. Simply tacking on some good cause or activity without alignment to your core business is more likely to be viewed in these cynical terms, and to be less valuable as a result. 

To be both successful and long-lasting, we have found this particular breed of CSR needs to be championed and owned by the staff (and especially management) and to be aligned in some way to the core business. For example, a food producer or retailer donating food, or a bank providing financial literacy courses for school children. 

But I prefer a broader, all-encompassing definition of the things that a company is doing that are of socio-economic value: ‘doing valuable things’ whether they are profitable or not, rather than just doing good things.

I would add to the existing tally here such disparate activities as simply providing products or services that meet a societal need, growing jobs, creating value for shareholders and superannuants, ensuring good staff conditions, safety and well-being. 

In these cases both the organisation and others derive mutual value from CSR. It admits and recognises that CSR can benefit an organisation in terms of attracting, retaining and motivating staff, in enhancing corporate image, and keeping investors and other stakeholders on-side. 

This, I think, is not only closer to the truth of the matter, but produces a more meaningful, credible and sustainable CSR model that fits with base business objectives (sometimes including the profit motive), rather than being pitted against them; that permeates and brings together business functions, rather than being a PR add-on. 

Indeed, it guides companies to choose CSR activities that actually work for them; those that are most aligned with their core business, are more efficiently undertaken, more likely to engage and motivate staff, or enhance their standing in local communities. These are, therefore, those activities that are likely to withstand internal and external change and to endure. 

You will note that I haven’t mentioned consumers yet, and this is because we shouldn’t overestimate the impact of CSR in marketing terms. 

There is a wealth of published research data out there that shows consumers would prefer to buy products from hypothetical ‘good corporate citizens’ over exactly the same product offered by another company. Of course they would; who wouldn’t?   

But these results do not reflect reality, where the marketing mix is never exactly duplicated and consumers use real money to satisfy real needs. 

If CSR activities were truly a major competitive advantage and selling point don’t you think that every advert would be crammed full of them? The truth is that, unless you occupy a niche positioning where CSR is the selling point, it is not going to count for much in consumer-land. 

Just think about two of the highest profile examples of the ‘giving back’ style of CSR in Australia; the Westpac Helicopter and Ronald McDonald House. These are very well known, positively received and certainly worthwhile causes. But have you ever met anyone who banks with Westpac or who buys an extra cheeseburger because of them? 

Our research clearly shows that the consumer benefit – rational or emotional – is the over-riding consideration every time. 

But that is not to completely dismiss the public or consumer benefits of CSR activities. They are a necessary, but not sufficient, condition for liking a brand, facilitating a purchase, or defending against external events and impositions. 

Let me explain what I mean using the example of a person in place of the corporation. 

If you see someone doing the right thing on the street, like putting their litter in a bin or even picking up another’s litter, their image may be somewhat enhanced in your mind, but you probably wouldn’t stop them to make friends or buy them a drink because of that ‘good thing’. It isn’t enough, and the same is true of a brand image and purchase decision. 

But if that same person were to do a ‘bad thing’, such as dropping litter, you would almost certainly not enter into a relationship with them. Indeed, you would probably dislike them, you may actively avoid them, tell others of their behaviour and want to see them punished. This is where brand damage and vulnerability to external risks can occur. 

And in the absence of good or bad behaviour the person or brand has neither the credit nor the blame, and lacks the profile that either behaviour provides. They simply fall into the shadows. 

So CSR acts as a buffer of goodwill between an organisation, its customers, shareholders, the general public and decision-makers. When things go awry it gives you a stronger, more credible starting position to enter a debate or defend yourself than those who do nothing or do the wrong thing. 

So, if done well, CSR is like responsibly putting away some money in the bank for that rainy day of external crisis, and it can be a good, sustainable investment for the organisation internally too.   

And, what’s more, it’s often simply a good guide on the right thing to do.   

Jim Reed is Group Director of Research & Strategy at Crosby|Textor.