Tuesday, August 24, 2010

Instead of Stating the Case Against, How About Re-defining the Case For?

Warning: I’m on the defensive.

Yesterday’s Wall Street Journal ran an article called “The Case Against Corporate Social Responsibility” that purported CSR as dangerous for society because it presumes companies are wrong to take on social welfare issues. These issues, the article argues, belong under the purview of government or civil society.

Since I work in CSR, it should come as no surprise that I find this argument flawed. I agree that social welfare issues fall under the jurisdiction of governments and civil society, but why is self-regulation a bad thing? In some cases, companies that self-regulate can set an example for how governments can introduce effective and practical government regulation. In others, CSR as self-regulation is in direct response to the concerns of civil society – the exact response that this article argues is “irrelevant” for companies to pursue. And yet if companies ignore these concerns, they expose themselves to risk - risk that can have a material impact on company operations and profitability.

I’m also troubled by the presumption that pursuing private profits or public interests has to be mutually exclusive. It’s not a zero-sum game and companies that want to be profitable often have to take into account how public interests impact their operations. At the risk of sounding like a cliché, there really are win-win situations.

But you’ll probably be surprised to hear that I actually agree with a lot that the article posits. The author describes a few examples of cases where company interests are aligned with public interest: fast-food chains expanding into healthier food markets, the development of fuel-efficient automobiles. The article characterizes these examples as cases where positive social impact is a by-product of a company singularly pursuing profit. In my mind, these are great examples of how managing CSR strategically has led to more innovation, market capture for companies and greater shareholder value.

It’s my opinion that companies can manage CSR strategically in order to become better-run enterprises, in order to recognize emerging risks and stimulate innovation in order to stay competitive in a dynamic marketplace. These are not concepts that are at odds. It’s only when companies mis-manage CSR or don’t seek alignment between CSR efforts and overall company strategy that they seem to sacrifice profits for social well-being or vice-versa.

I don’t know many CSR managers who advocate for companies to abandon their profit motives in order to chase the “greater good.” We all know that we’re working for companies with responsibility to shareholders. Our work aims to find the impacts our companies’ core business competencies and operations have on society and the environment and either mitigate these impacts or transform them from potentially destructive to productive. This approach does not require sacrifice – just a slightly more enlightened view of the interplay between business and society.

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