LEADERSHIP: FOR BETTER CSR

It’s unusual to read something balanced and practical about CSR. Activists want business to carry the wrap for everything. Apologists limit it to immediate operating activities and what the law requires. True, the primary responsibility is to sell sound products that people want, employ and reward fairly and act honesty and responsibly. But, the authors of a recent HBR article offer an insightful approach to the boundary issue of what is and isn’t a company’s responsibility? They make this erstwhile no-man’s land a fertile ground for corporate creative thinking and commercial good sense.

The authors point out that in the 1980s, notwithstanding sound evidence including their own, companies in the tobacco industry were still fighting the link between smoking and cancer. In contrast, over the last decade, the packaged food and restaurant industries have undertaken programs to remove trans fats – entirely at their own initiative. The authors speak of Kraft, Nabisco and Nestle “internalising externalities” – those “impacts that a business has on its broader milieu.” For example, adverse effects on consumers’ health or the local environment.

The authors offer us a politically fair-minded way of thinking about this – encompassing the need for action without going overboard. They give their argument urgency by highlighting the ever increasing level of public monitoring of social impacts through government programs and the huge increase in social networking, search techniques and other activities, which find and spread information (and anger) amongst concerned citizens (and potential litigants).

The authors make distinctions as to how a company should act. Taking ownership where there’s direct causality – as the food companies did. Taking action where there’s some link and you have problem-solving capability as Wal-Mart has done with its buying power to improve product disclosures. Or, taking interest if you see distant ripple effects and can identify others with capability – as Shell has done in supporting research on heat and fuel efficiency for cookers used in poor countries.

Here are some questions to consider. What are the externalities of my business: both close-in and further out. What changes to our thinking and/or business model are needed – and what’s the cost? Who should lead this and develop the plan? What should be our new benchmarks and how will we monitor them? How are we to communicate the program – both internally and externally?

It’s tough and confusing stuff. But the authors offer a sensible view and a helpful framework. My action suggestions may help you find an approach that’s commercial and practical. All better, as the authors put it, than engaging in “an incoherent mishmash of charitable giving, CSR programs, and “going green” initiatives.” Better to act proactively and strategically today than wait to be pushed into a war of tactical skirmishes (and court cases) that will damage your people, your brand and your business.

Categories for this Potshot:

HBR articles, Monitor and shape change, Understand your marketplace, Drive strategic rethink, Take charge and support others, Develop plans and actions lists, Lift benchmarks and IP, Communicate key messages, ,

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