When it comes to the debate about corporate social
responsibility (CSR) -- and whether companies can really do well by
doing good -- the gloves are off.
A study released earlier this year by CSR Watch said CSR
could actually hurt - not help - the bottom line. The study, "Does
Corporate Social Responsibility Enhance Business Profitability,"
was conducted by a group of economists, including Arthur Laffer
(aka "the father of supply-side economics"), who studied the
financial performance between 2000 and 2004 of companies among
those considered most socially responsible by Business
Ethics, such as Procter & Gamble, Intel and
Southwest Airlines. The conclusion: There is no significant
positive correlation between CSR and business profitability "as
determined by standard measures," according to the paper's
authors.
The Laffer missive hit the same week a massive article ran in
The Economist (Jan. 20) that also seriously pooh-poohed the
supposed benefits of CSR. "Capitalism does not need the fundamental
reform that many CSR advocates wish for," wrote the U.K.-based
publication. "If CSR really were altering the bones behind the face
of capitalism -- sawing its jaws, removing its teeth and reducing
its bite -- that would be bad: not just for the owners of capital,
who collect the company's profits, but, as this survey will argue,
also for society at large. Better that CSR be undertaken as a
cosmetic exercise than as serious surgery to fix what doesn't need
fixing."
But Peggy Connolly, for one, welcomes the criticism.
"A nerve has been struck when two pillars advocating that
businesses should just pay taxes, obey the laws and return profits
to shareholders" question whether CSR is valuable, said Connolly,
communications director at The Center for Corporate Citizenship
at Boston College, which advocates CSR in both the private and
public sectors and which is celebrating its 20th anniversary this
year. "But some of the world's leading companies, like GM,
General Electric and FedEx, have stated that they are
going beyond that and are showing that being responsible to
multiple stakeholders enriches their bottom line."
GM, GE and FedEx are just a few of the mega brands that belong
to the Center, which also counts Coca-Cola, IBM,
Starbucks and Walt Disney Co. among its 350
members.
The Center, growing about 7% a year, held its annual conference
last week in Boston, attracting nearly 500 executives working in
the CSR orbit -- a 20% increase compared with 2004. This year was
the first time the media were invited to the conference, an
indication that the center is aware of the growing chorus of
complaints about whether companies can make a legitimate connection
between CSR and enhancing the bottom line.
Nevertheless, the executives attending the conference -- senior
vice presidents for CSR, sustainability directors, heads of global
community affairs, community-relations directors as well as folks
from the C-suite -- all had one common goal: integrating CSR
throughout the entire enterprise.
While CSR certainly has moved onto the corporate radar screen in
recent years, it still has not shifted the center of corporate
gravity, and senior-level managers apparently need more convincing.
At a seminar titled "Embedding Social Issues Into Your Corporate
Brand," few people raised their hands when asked if their companies
had a signature CSR program.
Carol Cone, chairman of Cone Inc. (Boston), who is
considered a pioneer in the area of cause-related marketing (having
started in 1980, well-before the term CSR had permeated the
business lexicon), tried to disabuse the audience that CSR was
something still on the margins.
"This is no longer about soft stuff; this is about building
organizations," she said. CSR plans that are woven into
organizations "gives you content. Content today is the new currency
in an organization. Having content provides the company with great,
rich things to talk about and guess what people do one-to-one? They
talk about great things that are happening at companies," she says.
"Companies are under siege and need different ways to get people
get engaged. [Having a signature CSR plan] allows the brand to come
alive from the inside out, which can change an entire company."
Sue Adkins, director of Business in the Community, a
London-based nonprofit organization that promotes responsible
business practices, and author of "Cause Related Marketing - Who
Cares Wins" says companies have to be careful not just to craft a
CSR plan for the sake of doing so - an easy trap considering the
growing clamor for more corporate philanthropy.
"It's not just about picking a nonprofit," she says. "It's
finding a partner that can help make you smarter in your business
advocacy. And having a signature program also allows you to say
'no' graciously to other groups that may approach you for
partnerships."
Kevin Callahan, director/Global Citizenship and Policy for
Abbott Laboratories (Abbott Park, Ill.), used architectural
metaphors to illustrate how people communications executives can
fuse CSR throughout the organization.
"First you need to be a carpenter by building the framework of
the plan, something that reflects well on your company and your
corporate culture. That's the starting point," said Callahan, who
spoke at "The Ten Half-Truths of Integrating Corporate Citizenship"
session. He added: "Then you need to be a plumber and connect all
the pipes in the company. It's not enough to get CEO support; [the
plan] has to be part of the entire management structure."
Contacts: Sue Adkins, 011.44.207.566.8662; [email protected]; Kevin
Callahan, 847.938.1207, [email protected];
Carol Cone, 617.272.8302, [email protected]; Peggy Connolly,
617.552.0722, [email protected]