Corporate Social Responsibility – Where does CSR sit in your organization?
Corporate Social Responsibility or CSR was a buzz word that started in the 70s. CSR encompassed a company’s policies around the environment, philanthropy, how it treated its employees (time for volunteering, for example) and even transparency. It has since “grown up” into what is now called Environmental, Social & Governance or ESG. But I don’t think one replaces the other. In fact, I believe you need to take the steps for a solid CSR strategy before you can graduate to ESG.
Back in 2007, when I was working for Dow Chemical, I was invited to be the keynote speaker at a gathering of more than 60 Japanese corporations in Tokyo, hosted by the Japan Ecosystems Conservation Society and The National Trust of Japan. They were interested in learning why American companies cared about the Triple Bottom Line (social, environmental and financial impacts) that makes up the base of CSR. This one of the few areas where American companies were in the lead…and it had them puzzled.
The companies to which I spoke actually asked the question, “Why should corporations care about the environment? Isn’t that someone else’s job?” The answer, of course, was that companies who intentionally cared for their employees, their communities and the environment, tended to have better financials. And “intentionally” is, in fact, intentional. Companies needed to have explicit plans and policies that addressed not just how they would “do no harm” but how they’d protect the world in which they were operating.
When CSR first got started, being “environmental” meant having a recycling program or installing motion-sensor lights that go off when no one is in the office (saving energy). Now that’s not enough. Now, we see companies pushing for carbon neutrality. I would venture to guess that 2020 helped a lot of companies achieve carbon reductions as employees worked from home and office buildings were nearly vacant. Employees also contributed to those reductions by not commuting. Carbon neutrality is actually a statistic that gets measured (and reported) in most Annual Reports these days.
Why does it continue to be important and require a seat at the table? Just as important as having a great product is how your company behaves. Potential employees, especially those in the younger generations, are looking for employers who are intentional about saving, and being good stewards of, the environment. Investors are looking for companies that are not only financially sound but can compete in the global economy – which requires a commitment to operate in an environmentally-sensitive manner. The media is laser-focused on companies that are doing well and doing good and will be quick to call out those that aren’t. All of these stakeholders have a firm grip on your company’s reputation.
Do you have a strategy around what kind of organizations you donate money to? Around how you support your employees charitable giving and what’s important to them? Is your CSR strategy aligned with your company’s purpose? Do the executives have a passion for it? If not, it won’t cascade down to the employees or be seen as genuine by investors.
CSR is where your company’s values are made evident both internally and externally. This is just the start. We’ll get into ESG in the next blog.
