Corporate Social Responsibility: What Does It Take?

Once, not so long ago but certainly pre-recession, corporations understood the concept of corporate social responsibility. Back then, corporations not only rose to the occasion, they leveraged it to the good of everyone, themselves included, in what we used to call a “win-win.”

While there were incentives to behave admirably — such as increased customer and employee loyalty, tax breaks for donations, and a strong rise in community status — companies mostly were socially responsible simply because it was in their nature to do the right thing.

Then the recession came along and sucked most goodwill down with it. The focus became sharply and almost cruelly affixed to profits and corporate benefit. Indeed, some of that behavior was perfectly reasonable given the severity of the economic crisis. After all, how can any company help society if it folds?

But a lot of bad behavior sprang forth too and much of it was just fear and greed run amok.

For awhile, the lack of socially responsible behavior passed with few remarks. The recession had changed attitudes all around and what was once unacceptable became largely expected.

As it turns out, the one-side-wins model proved unsustainable as its impact on society at large was entirely negative. Before long, the backlash on corporations also wasn’t tolerable.

One need only look around to see a plethora of examples of companies severely punished for a perceived lack of social responsibility. Most recently that would include Olive Garden, which saw a 2012 2Q earnings drop after saying it would cut workers to part-time to avoid providing healthcare insurance for those workers, as well as Papa John’s pizza and Whole Foods for taking similar positions.

But companies have to be careful too about which social calls they answer. Take the case of Chick-Fil-A’s stance for the defense of traditional marriage and against same sex marriage. While those consumers who supported the move lined up in droves to buy the company’s products on a single day, detractors called it anti-gay and anti-social and boycotted the company for months. The move also resulted in some of Chicago’s city leadership blocking Chick-Fil-A’s planned expansion into that area. As a result, Chick-Fil-A withdrew its active opposition to gay marriage and even pledged to support it. But it did so quietly for fear of backlash from the other direction.

So this business of social responsibility can be botched and botched badly yet still a company must do something socially responsible because customers demand it now. But so do governments, it turns out.

For example, the U.S. Securities and Exchange Commission (SEC) mandates that managed investment companies formally report their corporate social responsibility (CSR) actions. The mandate is far reaching with even banks in Thailand hurrying to comply.

A Thailand-based newspaper, The Nation, reported that while at a local event on meeting CSR standards, the SEC assistant secretary-general Waratchya Srimachand said: “Any firms planning to issue new securities will have to disclose on form 69-1 whether they have operated as per SET’s 2012 document on CSR practices regarding stakeholders, the economy, the society, and the environment. The disclosure will provide key information to investors for their decisions. The regulation is expected to be effective from January 1, 2014 onwards.”

Further, The Nation reported “…the SEC has teamed up with Corporate Social Responsibility Institute (CSRI), under the Stock Exchange of Thailand (SET), and with the Thaipat Institute. Their 2013 CSR and sustainability plan is shaped towards the second era of sustainable development by focusing on ‘disclosure’ and ‘openness’ to meet expectations of society broadly.”

In total this means that CSR is now required by both consumers and governments worldwide thereby making it a defined and meaningful part of doing business in today’s world. Certainly some companies are more subjected to these requirements than others, but none can skate by without any action at all, at least not for very long.

But as was also pointed out earlier, taking socially responsible actions can prove to be precarious in the end. The best way to avoid problems while undertaking a socially responsible stance is to first avoid hot political and religious concerns if at all possible and secondly to act according to the five pillars of CSR. Here they are in no particular order of importance:

1)      Stakeholder-based CSR

2)      Economy-based CSR

3)      Society-at-large-based CSR

4)      Local Community-based CSR

5)      Environment-based CSR

Address each of those concerns in your CSR planning and watch your company prosper! After all, back in the day when CSR was just thought of as good PR, actions like these worked like a charm and laid the groundwork for strong company futures via consumer and employee loyalties. There’s no reason to believe these tactics won’t work their magic again.

pam bakerPam Baker is the author of eight books and hundreds of technology articles published daily in leading online and print publications. She is a member of the National Press Club (NPC) and the Internet Press Guild (IPG). You can reach her or follow her on Twitter and on Google+.

Tags: Business,Business Intelligence,Business Management