The term Corporate Social Responsibility (CSR), has been part of the business lexicon for over half a century. It first appeared in Howard Bowen’s landmark book Social Responsibilities of the Businessman (1953). Bowen defined CSR as: ‘the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society’. More recently, the World Business Council for Sustainable Development (WBCSD), a global, CEO-led organization of leading businesses working to accelerate the transition to a sustainable world, defined CSR as: “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families, as well as of the local community and society at large”.
While the substance of these definitions hasn’t changed very much, ways in which companies integrate CSR into their organizations have evolved significantly. A large number of companies have abandoned the term CSR altogether, opting for more relevant and holistic concepts such as Corporate Sustainability, Responsible Business, Conscious Capitalism or Creating Shared Value.
These represent more than just a name change. At their heart, they signal fundamental shifts in the perceived role of business in society, how businesses create and measure value, and attitudes to stakeholder engagement. They are not about trade-offs or doing charitable works (though the latter remains important). They are about identifying opportunities to help solve social and environmental challenges while simultaneously creating business value.
The problem with CSR
Around the world, CSR programmes have often equated to philanthropy and thus been dominated by financial and in-kind donations, sponsorships (which are marketing not CSR), and non-skills-based employee volunteering. A relatively small number of companies seek out opportunities to contribute their people’s professional skills to worthy causes. In many cases these CSR programmes focus on issues and groups that are not directly related to the company’s core business and purpose. As a result, CSR has tended to be a siloed activity with little or no linkage to business strategy or internal processes. It is fair to say that this depiction of CSR applies in Trinidad & Tobago today.
However, as mentioned previously, how CSR is being integrated into leading businesses has evolved significantly. For example, a purely philanthropic view of CSR is no longer considered best practice. While philanthropic programmes are important and do create benefits for beneficiaries, these are often narrowly focused, short-lived and poorly aligned to the activity of the business (thus resulting in a low social return on investment). The benefits to the business are also limited or ignored altogether (a low financial return on investment).
What this means is, traditional CSR programmes only scratch the surface of social and business value creation. No wonder CSR budgets are usually small, under constant pressure and among the first to be cut in difficult times.
What does good look like?
So, if the prevailing approach to CSR is outdated, what does good practice look like? Below are a few key characteristics:
Strategic and material – A CSR strategy is in place that contributes to the overall business purpose and strategy. This CSR strategy should focus on the stakeholders and issues most material to the business. This will help maximise the positive impacts created.
Effectively governed – A member of leadership is accountable for CSR performance and sufficient resources are allocated for day to day management of the programme. An advisory board or committee may oversee the programme and make key decisions.
Holistic – CSR is not just philanthropy. It covers areas such as corporate governance, business ethics, stakeholder engagement, responsible procurement, diversity & inclusion, health, safety & security, employee wellbeing, training & development, reducing environmental impacts across the value chain, and creating more inclusive business models.
Resource efficient and effective – Interventions go beyond financial contributions, in-kind donations and unskilled volunteering to identify which of the organization’s resources can efficiently make the greatest positive impact. Resources include money, time, technology, facilities & equipment, products & services, employees’ skills & experience, networks & relationships, and influence.
Measurable – Includes targets and commitments supported by quantitative and qualitative performance metrics.
Where to from here?
In Trinidad & Tobago, our society is changing. Economic, social and environmental challenges seem to be getting worse not better. Business has a role to play. CSR best practice has evolved. Now is the time for our private sector to start catching up.
Note: This article was originally published in the Business Supplement of the Trinidad & Tobago Guardian on Thursday 23rd November 2017.