By Sneha Sheth
Traditionally, corporate social responsibility (CSR) has ranged from donations to a CEO’s favorite nonprofit to company-sponsored employee volunteer days. But in recent years, CSR has started to change. Growing awareness of corporations’ potential to help solve global challenges has spurred innovative CSR practitioners to shift from the “charity” CSR model, in which CSR programs operated in a silo apart from the core business, toward CSR initiatives that make investments in areas central to a business’ strategy. These CSR programs tend to proactively solve problems rather than merely ameliorate the effects of those problems, and to be mutually beneficial to corporations and others.
Forward-looking global business leaders have already begun to make this shift; according to a survey of 250 global business leaders, at least half of their companies are already integrating CSR into business strategy, expecting that integrated efforts will help grow revenue streams or control costs.
Christine Bader, author of The Evolution of a Corporate Idealist: When Girl Meets Oil, recently gave a D. Talk in Dalberg’s New York Office. Bader urged CSR leaders to identify the “sweet spot” in which incentives to carry out CSR initiatives are aligned with a company’s overall business goals. Drawing on nine years of experience helping oil giant BP manage the social impact of projects in developing countries, Bader offered the following guidance to companies:
- Seeing is believing – Give executives first-hand experience with the environmental or social issues linked to your company so they are willing to commit resources to CSR. Bader shared a story about Darryl Knudsen, Senior Advisor on Business and Human Rights at Gap. After a factory fire in Bangladesh, Knudsen met with survivors and their families. He told Bader that witnessing the people and situations affected by his company strengthened his commitment to the company’s CSR work. “I need to be confident in representing the choices we’re making as a company, and I need to know I’m going to fight hard for the right choices,” he told her. Bader noted that in lieu of physical visits, sharing photos and stories about the people and places affected by a company can also help senior leaders feel confident in their decision to commit resources to CSR and even integrate CSR efforts into their business’ strategy.
- Align incentives and create ownership – Listen to your employees’ goals and help them see where CSR fits in. Rather than evangelizing about sustainability and social issues, said Bader, CSR leaders should understand what employees care about, what they are paid to do, and what motivates them. While some people might be intrinsically motivated to champion CSR initiatives, others might get on board only after seeing that CSR efforts will give their project world-class status. Bader’s point echoes advice from Amir Dossal, founder and chairman of the Global Partnerships Forum, at a D. Talk in February 2013: companies will help lead social change if they can identify “what’s in it for them.”
Embed CSR efforts throughout your organization’s policies. According to John Ruggie, the United Nations Special Representative on business and human rights (whom Bader advised), “The era of declaratory CSR is over.” In other words, it is no longer acceptable for companies to make verbal commitments to achieve social good – without corresponding actions. Companies should track, assess, and report on CSR activities and investments with the same rigor they use to track business metrics – and embed this rigor into standard practices. For example, some companies have begun to require that project proposals and third-party contracts incorporate a social and environmental risk assessment. When tactics like these become standard policy, there is less risk that they will fall by the wayside, even if a particularly supportive leader or employee leaves the organization.
- Recognize that progress will be slow and difficult to measure – but don’t get discouraged. While CSR practitioners may prevent human rights violations or disasters, they rarely get rewarded for what doesn’t happen. Scrutiny tends to coincide with accidents like Deepwater Horizon, but Bader contends that CSR leaders are dealing with thorny issues at the heart of global development every day. Despite leaders’ best efforts, it is possible that things will go wrong. Even so, Bader urges the CSR field to recognize that progress is incremental – and even tiny steps can move giant companies in the right direction.
Dalberg has helped many organizations – from a large pharmaceutical company to an Indian chamber of commerce – align their business goals with social impact activities. Indeed, Dalberg Asia Regional Director Gaurav Gupta commented earlier this year, “The more strategically you think about CSR, the more you can start to think of creating a business impact while creating a social impact. When you disconnect the self-interest, it’s not sustainable.”
Gupta’s comments come on the heels of a new law that has brought CSR into the spotlight in India. As of April 1, 2014, Indian corporations that fall above specific revenue, net worth, and net profit thresholds are required to contribute 2% of their net profits from the preceding three years to CSR initiatives. The new law has been called everything from “vague” to a “one-of-a-kind legislation,” raising both hopes and questions about the role of Indian corporations in charitable ventures. In light of these new regulations, Indian corporations have a chance to incorporate strategic CSR of the kind touted by Bader and Gupta – if they, too, seek out “the sweet spot.”
To contact Gaurav Gupta regarding CSR activities in India, click here.