Corporate social responsibility (CSR), or corporate citizenship, is not a new concept. The idea that businesses should be responsible and engaged members of their communities, both locally and globally, has been around for quite some time. However, the understanding of what that means in practice and what the larger significance of good corporate citizenship is has evolved over time. Today it is more important today than ever before.
Recently, I had a chance to participate in two great events that explored this topic in depth: CSR: Business Solutions for Emerging Markets conference organized by the Business Civic Leadership Center (BCLC) and Corporate Strategic Responsibility: What’s Next for CSR? organized by Partners for Democratic Change, together with the GE Foundation and the International Finance Corporation CommDev Office. They both attracted excellent speakers and active participants, asking key questions about what makes corporate citizenship successful and why it should be a key element of a company’s strategy.
These are the themes and new concepts that I took away:
- Focus on employees. CSR used to be largely driven by external considerations such as reducing risks and costs or shaping consumer perceptions. Now it is equally driven by internal objectives to attract and retain top workforce talent. The demand is clearly there: according to a study by Net Impact, more than 70 percent of college students and 50 percent of workers are looking for jobs with social impact.
- Corporate volunteerism. In line with the value that employees put on their work having social impact, more and more companies make various volunteering opportunities a part of their employment. Others participate in larger programs or joint initiatives such as BCLC’s International Business Corps, working to build the capacity of NGOs in developing countries. As Robert Goodwin, CEO of Executives without Boarders, said, “CSR is about empowering local organizations to do what they do best.”
- Focus on value chain. As companies expand internationally, they realize that it is not enough to act responsibly in their own operations. Instead, they must pay attention to what happens throughout their global network of business partners on issues ranging from environment and labor practices to anti-corruption. As Kathy Pickus, VP of Abbott Fund, put it, CSR in value chains is about processes, policies, and practices to help suppliers raise their standards.
- Shaping pre-competitive environments. With growing corporate interest in frontier markets, CSR can help open new markets by fostering local talent and building relationships with local organizations before a company establishes a business presence there.
- Partnership and stakeholder engagement. Successful CSR initiatives by companies must focus on what matters to the community they seek to work with. It is the partnership model that truly distinguishes corporate citizenship from philanthropy and helps achieve the greatest impact in tandem with local organizations. “Don’t forget local partners in international partnerships,” reminded CIPE’s Executive Director John D. Sullivan.
- Investing in good governance. In countries around the world issues such as rule of law and transparency are an important business concern that requires a broader view of what has been traditionally considered the realm of CSR. As active participants in these markets, corporations cannot simply stand aside in places where corruption and collusion flourish. Instead, they must work to expand the reform space through a multi-stakeholder engagement process that involves local actors (such as business organizations and civil society groups) and enables a constructive dialogue with the government on policy issues. That is where the intersection between business and democratic development is very clear and requires partnerships bringing together the private sector and other stakeholders. As GE’s Karan Bhatia noted, countries that develop stable democratic institutions are where businesses – both foreign and domestic – want to invest long term.
- Shared value. Seeing corporate citizenship as a way to improve the environment in which companies operate is at the core of shared value – the idea that creating economic value can be done in a way that also creates value for society by addressing its needs and challenges. Companies serious about their commitment to good corporate citizenship understand that their CSR efforts need to be linked to their core competencies and business strategy. Without creating shared value, they won’t be sustainable.
- Social entrepreneurship. Using entrepreneurship and market means to achieve social ends is a trend gaining global momentum. From harnessing the power of microwork to give the poor a dignified source of income, through providing financial solutions for the “middle of the pyramid,” businesses innovate to redefine and expand the areas traditionally thought of as worthy of investment.
- Corporate intrapreneur. Tied with the notion of social entrepreneurship is one of corporate intrapeneurs – individuals who do not start a social venture from scratch but rather find new, social impact-focused ways of doing things in companies where they work. The challenge is to overcome “CSR silos” that may form around corporate CSR departments and make sure that the engagement is company-wide.
Certainly various challenges to advancing good corporate citizenship remain. Many companies are still unsure where and how to begin their engagement. The traditional way of measuring corporate performance through quarterly financials makes it hard to support long-term CSR investments. And successful initiatives require not just business acumen of individuals but broader corporate vision and leadership from the top. But one thing is clear: CSR is evolving beyond philanthropy to incorporate both social good and strategic business goals.