Many companies are moving beyond basic CSR to a holistic approach
Is corporate social responsibility (CSR) falling from grace? After 20 years advancing into corporate Canada, the practice may be sputtering, according to a recent study.
Leader companies are finding that this long-standing approach to embedding social, environmental and stakeholder considerations in business strategy and decision-making doesn’t necessarily generate the business or social results they were hoping for.
This study by Strandberg Consulting was based on research conducted for the Canadian government in the fall of 2018, involving interviews with 32 companies known to have established CSR practices.
Most companies had a formal CSR approach and strategy, with policies, goals, targets and key performance indicators or metrics. They were asked to describe their current CSR approach and shifts in their CSR practices over the past five years, and it was evident it has become a more formalized practice in business, with leaders moving beyond “CSR in business” to “social purpose in business.”
A significant minority said they don’t use the term CSR and think it is passé: “CSR, as a term, is outdated” and “We consider ourselves post-CSR.”
Looking at the comments, there’s an emergence of a new approach to social impact in business. When asked if their CSR approach had shifted in the past five years, those interviewed cited the following:
Approach: They changed their approach from scattered, ad hoc activities to more strategic efforts with goals and targets.
Focus: They changed their focus from philanthropy, donations and community investment to an enterprise-wide approach to embedding societal aspirations into everything they do.
Relationships: They shifted community relationships from transactional, one-off, short-term efforts to a transformational style where they seek durable, systemic improvements that address the root causes of societal issues in communities in collaboration with community partners.
Many respondents had adopted or were in the process of adopting a “social purpose” as the reason for the company’s existence. Notably, they don’t use CSR terminology.
They view social purpose as a more holistic approach to the business, in which the business model is infused with social intent and not treated separately.
A social purpose business is defined as “a company whose enduring reason for being is to create a better world. It is an engine for good, creating social benefits by the very act of conducting business. Its growth is a positive force in society,” according to the Social Purpose Institute, a program run out of the United Way of the Lower Mainland in Vancouver.
The findings suggest a continuum or pathway of CSR practice: From level one, community investment, to level two, CSR strategy, to level three, CSR integration, and level four, social purpose.
Almost half of the companies appeared to be at level four: They indicated they had or were developing a social purpose or mission as the reason for the company’s existence.
“We haven’t used the term CSR for a long time. We are a social purpose business. The difference between a social purpose business and a business with a CSR program is that a CSR program is bolted on. CSR programs thus have an indirect connection to the business, whereas social purpose businesses have mechanisms that address social purpose holistically. All our programs are tied into supporting that social purpose, which is generally geared toward improving the community or society and that’s how we operate. Our social purpose is linked into our mission and our value statement; the overlap is pretty much the entire thing. So, everything is aligned that way.”
Other trends in CSR
Other CSR shifts in the past five years include integrating CSR considerations throughout the business, becoming more data-driven and community investment (philanthropy) practices:
Integration: Companies are embedding social and environmental considerations into all business decisions. For example, employers are including CSR in the roles of HR, finance and other functions.
Data-driven: A number of companies are now taking a data-driven approach, improving the ways in which they track, measure and collect data and using data management to inform the CSR strategy.
Community investment: Companies are moving from pro bono volunteering and granting programs to more strategic hands-on partnering, and they are also providing greater access to resources such as space, employees and other assets. They are shifting from supporting many non-profits in a non-impactful fashion to partnering with a reduced number on higher-impact activities.
Companies pursuing CSR strategies confront more implementation barriers than those advancing a social purpose, according to the study. The difference between having a CSR strategy and having a social purpose business model is profound.
Employers that have a CSR strategy often struggle to gain buy-in and take-up from senior management, board and executive leadership, whereas companies with a social purpose have already secured that support: Leaders will have adopted the social purpose and committed to embedding it enterprise-wide and across the business model — such is the nature of a social purpose business.
That said, here are the challenges employers face in implementing CSR priorities:
• lack of buy-in from senior management and executive leadership
• lack of evidence of the CSR business case
• lack of time and resources
• difficulty in shifting the corporate culture to embed CSR principles.
These barriers are interlinked and relate to challenges in understanding the business benefits and the role of business in social change. In fact, the most common solution identified by interviewees is to develop the CSR business case to get senior management on board.
Although admittedly based on a small sample size, the results of this study show that Canadian employers are evolving in their approach to social impact. Leaders are realizing that by aligning with a social purpose as the reason for existence, they can generate greater business and social impacts.
Arguably, HR leaders have the most to contribute to this new social purpose in business agenda. They hold the reins. And the time is now.
Coro Strandberg is president of Strandberg Consulting in Vancouver. For more information, visit www.strandberg.com.