CSR: yes; it’s broken & yes; it must be fixed

Vice President Antonio Tajani, European Commissioner for Industry and Enterprise, presented recently a communication on a renewed industrial policy, “An industrial policy for the globalisation era”. The official communication says that “Corporate Social Responsibility can contribute to the competitiveness and sustainability performance of European industry (…) Corporate Social Responsibility can position European companies as leaders in markets that are putting an increasing premium on social and environmental issues”.

Some days ago Antonio Vives posted an entry in his blog with the title “Si no está roto, no lo arregles: Porter y Kramer sobre RSE” (If it isn’t broken, don’t fix it: Porter and Kramer on CSR) commenting the article written by professors Michael Porter and Mark Kramer: “Creating Shared Value: How to reinvent capitalism and unleash a wave of innovation and growth” (published in the January-February 2011 issue of the Harvard Business Review).  In this article, Porter and Kramer support a change of name for this function: “from CSR (Corporate Social Responsibility) to CSV (Creating Shared Value). According to Vives, “Porter and Cramer’s ‘great idea’ is merely a change of abbreviation for CSR. The only thing they propose is a strategic concept of responsible practices. Nothing new, but potentially hindering the progress of our dear CSR, adding greater confusion of terms”.

Also some days ago one of the most active bloggers in CSR in the English language, Aman Singh, mentioned in her blog (Vault.com) a post titled “Perhaps the definition is semantic” (published by Jonathan Banco in The inspired Economist ) which claimed that the problems related with CSR are no more than semantic debates.

These are only two examples of what is going on at this time. Ten or twelve years after the dramatic appearance of this corporate concept (CSR), can we still not agree on what to call it and what its contents are? For a long time we have advanced with considerable stubbornness, with little or no thought, towards the implementation of “social” programmes and projects.

This is why I believe it is time to say that CSR is in fact broken (or is starting to break) and that it must be fixed once and for all.

What is the problem? In my opinion, “Social Action” and “Philanthropy” have won the battle against CSR. If we ask the public (but not the authors of ISO 26000, who clearly state that social action is not CSR), CSR is perceived as more closely related with social projects carried out by corporations than, for example, management of business-related risks on social, economic or environmental matters. This is why I believe it is time to stop and think. If we understand the problems, we can find the solutions.

The problems associated with the concept of CSR

First. We are dealing with a concept that has many thorny aspects, particularly as regards its acceptance in the English-speaking world.

• The concept of Responsibility in the English-speaking world is closely related to legal aspects. In English, Responsibility is equivalent to compensation, lawsuits, what is known as Compliance (for this reason, management of ethical codes is in the hands of lawyers, not the CSR areas). This makes it difficult to accept the idea that CSR is a voluntary matter. If there is a legal responsibility behind it, it is not voluntary (from an Anglo-Saxon point of view).
• The term ‘social’ evokes concepts of solidarity, instead of the concept of building relationships of trust with groups that approach an institution with a legitimate interest.
• The term Corporate makes one think of it as something related only to corporations, thereby excluding any other institutions from it

Second. We are dealing with a concept with so much content that it can hardly be grasped or managed. This umbrella has been used to try to cover matters as diverse as environmental management, climate change, ethics, diversity, reconciliation of work and family life, corporate volunteering management, integration of persons at risk of exclusion, social sponsorship, social entrepreneurship, multi-stakeholder dialogue, transparency, SRI, corporate reputation, human rights etc. Other corporate figures are much less complex: people, operations, finance, marketing etc.

Third. The absence of global standards allowing to talk about the same thing. Since the launching of the Global Compact in July 2000 until the approval of ISO 26000, we have still not agreed on what to measure and how to measure it. For this reason, in recent years there have been numerous initiatives in Spain and Latin America meant to certify responsible behaviour, a profitable business that will lead to an even worse understanding of what we are talking about.

So, which way to move forward?

I have been thinking about how to move forward for some time. In view of such complexity, simplicity is required. For this reason, it seems to me that a line of progress, the line of progress, is in the definition made by the Dow Jones Sustainability Index (DJSI): “Corporate Sustainability – it states – is a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments”.

This definition contains everything that is important. It is pure gold:

• Business approach. It has to do with the core business, not with peripheral activities.
• It seeks to create long-term shareholder value. It has a long-term view for guaranteeing the investment, not making a quick profit.
• Embracing opportunities. The public agenda generates new business opportunities: energy efficiency, accessibility… You only have to consult the Europe 2020 Agenda to see this.
• Managing risks deriving from economic, environmental and social developments. Risk management allows added value to be provided and risk premiums to be reduced in markets.

This is where the future lies. A return to Corporate Sustainability. Not a sustainability related only to eco or green concepts. Instead, a sustainability related to value, opportunities and risk management.