CSR: Rediscovering the social compact

SINGAPORE – Captains of business attending the Asian Forum on CSR are saying here the worldwide financial meltdown is not going to affect their commitment to CSR. In a press conference at the start of the two-day forum in this city state that’s officially in recession, some of Asia’s movers and shakers of industry reassured that they have a long term view for their investments in CSR.

In fact, it was pointed out that the financial crisis might even help strengthen CSR’s importance to business. The catastrophic fall of some of Wall Street’s biggest investment banks was brought about precisely because of an absence of CSR, a point that was echoed by many speakers in various sessions.

There is however, a muddled understanding of what CSR is. Ask any number of delegates attending this conference and you are likely to get an equal number of opinions on what constitutes CSR.

What is referred to as CSR could be one of at least three things: 1) old fashioned philanthropy; 2) part of marketing communications to increase sales or a PR effort along the lines of Reputation Risk Management to mitigate potential dangers to the corporate/brand image; 3) CSR – as ethical corporate behavior responsive to society’s expectations and integrated to the business model.

Old fashioned philanthropy is subject to the vagaries of the financial environment and the company’s financial condition. Doing good is likely to end if the corporation suffers a financial reversal of fortunes such as a significant loss associated with investments in the fallen Wall Street banks.

The many things corporations do as part of Reputation Risk Management to enhance corporate or brand image will still get done during a downturn depending on availability of resources. But that’s not exactly CSR even if the activities may have positive social effects. These activities are also not necessarily integrated to the regular operations of the company and can easily be set aside.

The third kind, the real CSR that’s part of regular business operations is there because it is also necessary to get what amounts to a social license to operate. It will have to get done for so long as the company is in business, profitable years or down years. CSR in this sense, is a reiteration of the social compact — that we all are persons or corporate entities, subject to the social expectations of good behavior… of being good members of society. The alternative to CSR is tougher and more expensive government regulations.

Signing a fat check for a worthy cause is not CSR, the speakers agree. Rather, adopting a way of life or a mode of business behavior that ensures the ability of everyone to live in harmony with each other and the natural environment is real CSR.

The example was given of Holcim, the multinational cement company. Holcim used its technical research capabilities to develop an alternative to sand used in construction (in short supply in Singapore) by using a waste material from Singapore’s shipbuilding industry. That’s CSR. When Holcim endeavors to reduce its carbon footprint from its operations year after year and meeting its targets… that’s CSR. But when Holcim builds schoolhouses in poor communities they otherwise have nothing to do with, that’s corporate philanthropy.

When Unilever Indonesia helps a farming community develop and plant a new breed of black soy beans that they also buy for use as raw material to manufacture some of their products, that’s CSR. Unilever helped the farmers earn a livelihood by integrating them into the company’s supply chain. This CSR activity will get done even in times of financial crisis.

But when Unilever launches a personal cleanliness campaign featuring their disinfectant soap Lifebuoy, that’s marketing and maybe PR to generate good feelings about the brand. It is not CSR even if it propagates a desirable social behavior. Unilever can easily drop the activity if budgets are tight.

The emerging consensus here is that there is no running away from real CSR. It has become a business imperative. The younger generation expects it as employees and as citizens. There is an increased sensitivity across the board for more responsible behavior from business.

Yet, there is also increased skepticism that everything the business world calls CSR is actually CSR… or if companies even believe what they say about corporate responsibility. People are examining the self interest behind so called CSR activities.

It was pointed out at various presentations during the conference that CSR became a buzzword in the wake of the Enron/Worldcom scandals. All of a sudden, there was this talk about the need for greater transparency and accountability in business.

What feeds this skepticism is the realization that it just took a few short years after Enron for us to face an even bigger and wider crisis of confidence that can be attributed to corporate social irresponsibility. At least two speakers pointed out that the concept of capitalism, where greed is supposed to be good, would have to change if people are to regain their trust and confidence in the business sector.

Financial ethical behavior aside, the greening of the environment is emerging to be the favorite cause of CSR proponents. And they are not talking of just a few weekends of planting trees. They want to make sure business operations do not damage the environment.

With all the publicity given to global warming, the experts told this conference that people now have an increased sense of responsibility for saving the planet. People are worried about changing climate and are concerned about deforestation, depletion of natural resources and availability of clean water. Corporations wearing the “green collar” are more likely to get a more favorable reception from today’s young generation of consumers/citizens.

President-elect Obama has it right when he stressed that despite the weakening of the economy, he has no intention of softening or delaying his aggressive targets for reducing emissions that cause global warming. That was the message of this conference: do your CSR or face government regulations.

In a sense, adopting CSR as part of the corporate business model as a mode for doing things is just the smart way to run a business in today’s world. Bottom line is, businesses don’t have a choice. It’s CSR… the real kind… or bust!

Jay Leno on Wall Street

‘I want to warn people from Nigeria who might be watching our show, if you get any e-mails from Washington asking for money, it’s a scam. _Don’t fall for it’ _

Boo Chanco’s e-mail address is [email protected]