The social impact of CSR: mainstream or fringe?

CSR seems in the throes of an identity crisis. Even its name is no longer clear, with many professionals shrinking at “CSR” and its associations. Once a do-gooding sideshow, CSR (or whatever we call it) is now expected to perform in the genuine interests of society, with the idea of “social impact” coming into clearer focus. You could say that the age of widespread social business is upon us. And yet, where expectations have risen, practice can trail behind. Here, Chris Gorst of The Social Innovation Partnership, reflects on how social impact could come into the mainstream.

John Browne’s recent book Connect has landed in our laps the astonishing figure that 30% of a company’s value depends on how it interacts with society. Research by London Business School Professor, Alex Edmans has revealed that the ‘100 Best Companies to Work For in America’ out-performed their peers by 2-3% each year between 1984-2011. Add to this other dimensions such as customer satisfaction and environmental sustainability and you begin to see the power in Edmans' maxim: do good, do well. Pursuing social good is not necessarily at the expense of profit, it can support profit.

It doesn’t stop with company culture or customer loyalty either. Many of the most successful and enduring businesses have what we could reasonably call a social mission embedded deep in their DNA.

Edmans cites the example of George Merck who wanted to use science to save lives and established the pharmaceutical company, Merck & Co, to achieve just that. Hence when the company achieved a dominant position in penicillin production in the early 1940s, rather than seeking to exploit this, Merck shared the secrets of how to make it with his competitors and the government. Today Merck & Co celebrates its 125th year, at a time when companies’ lives at the top of the corporate tree are getting shorter and shorter.

But if social impact really can be consistent with, and even supportive of, commercial success, where does responsibility for this rest within the modern business? An obvious contender is the CSR team which, for all the talk of integrating CSR into the businesses’ core functions, still exists in most large corporations. And yet few, if any, CSR professionals would say that they sit at the heart of corporate decision-making or business strategy.

So we have what must be an unstable situation: corporate value increasingly dependent on social considerations, while the professionals notionally responsible for it too often sit on the side-lines.

This situation presents both challenges and opportunities, with the latter outweighing the former. If the CSR function continues to exist on the fringes, the gap between what it actually does and the real demands of the business and of consumers will eventually form a chasm. This is surely a route to irrelevance. Meanwhile, if the percentage of business value dependent on social considerations is at 30% today, what will this be in a decade’s time? A host of factors all point in the same direction: ever rising consumer expectations of quality; the increasing porousness of business in the age of social media; values-focused millennials increasingly driving economic trends; a growing global middle class. The list goes on.

So what can the CSR professional do today to take advantage of these opportunities? The recent Crowd forum on social impact suggested the following ideas:

  • Sell the message to cynics: Corporate citizenship should work on the basis of “smart economics” whereby activities are good for both the business and wider society.
  • Outcomes not inputs: Most CSR evaluation focuses on inputs rather than positive changes achieved. The temptation is to measure what it is easy – and least risky – to measure. But does this really convince the media-savvy, sceptical consumer anymore?
  • Take a rounded view: You need a combination of human stories backed up by hard evidence to powerfully communicate social impact.
  • Corporates, charities and the public sector: The new economic context requires us to think more imaginatively about who creates social impact. The public sector is clearly reducing its footprint as it steps back from certain activities. Charities are already thinking more creatively about how they invest in themselves to grow. What is the role of philanthropy and corporate citizenship in this emerging environment?
  • It’s got to be equal. Some charities fear becoming transactional supply chain partners to a corporate that wants to do have a social impact, rather than contributing on an equal basis to creating “shared value”.

Perhaps the starting point for responding to these opportunities is for CSR to get as serious about impact and strategy as the commercial operations it sits alongside. That way, aligning CSR with core business – the oft-promised, but seldom achieved, goal – becomes one step easier.

Chris Gorst is a director at The Social Innovation Partnership, a trusted advisor to public, private and social sector organisations seeking to maximise their social impact.

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