CSR, as we know it, is over
Addressing the societal and commercial imperative to merge corporate social responsibility with business
Cecilia Tran leads communications and public relations at Long Dash. She previously founded a content strategy consultancy for mission-driven companies.
Yuval Noah Harari’s renowned book on human history, Sapiens, points out that the coordination of millions of people is possible because of one revolutionary factor: the power of storytelling. We are told and believe that nations exist, laws are real, and money is more than pieces of paper traded amongst strangers. These ideas organize the world as we know it, adapting and evolving as societal needs shift and the world changes.
I share this to ground a topic that has been on my mind: the stories we tell ourselves about business and corporate social responsibility (CSR). The prevailing narrative since the Andrew Carnegie and John Rockefeller era is that CSR is morally important yet wholly incompatible with business. After all, isn’t it the case that businesses make money and CSR costs money? Following this logic, companies develop an independent “.org” arm or social impact department that is siloed from the core business. However, we have entered a new era that requires brands to challenge and evolve this story to pursue both social impact and profit through a singular strategy.
Consumers’ trust issue with CSR
The last few years have pulled back the curtain and exposed the fragility of our health, social safety nets, the planet, and our political system. The American people are looking to companies to play a larger role in the solution. 73 percent of consumers in a national survey believe brands must act now for the good of society and the planet. Yet the skepticism also runs deep. In the same survey, 71 percent don’t believe brands will deliver on their promises, and instead employ “CSR washing” as a means of superficially boosting their image. This is not astonishing when companies go through so much effort to publicize their CSR efforts without integrating the same values into their supply chain and products.
The reality is companies can only build trust by behaving in ways that consistently align with their stated values. This means a company’s social impact objectives integrate across every aspect of their business, not just a siloed CSR department and the stories that stem from it. This would mean creating social impact objectives that sit alongside growth metrics. It could include involving social impact experts in meetings that pertain to product or service development, operations, and finance or ensuring experts in their field incorporate a social impact lense into their work. And it would necessitate empowering and rewarding employees for innovations that meet a company’s CSR objectives.
The public good is good business
This is not simply ivory tower theory; companies that have taken this to heart are reaping the benefits. In a recent Deloitte study, high-growth companies— those with 10 percent or more annual growth—were 66 percent more likely to see purpose as a means to guiding employee decision-making. Skeptics could argue that fast growth gives businesses the flexibility to consider purpose and CSR rather than causing the gains themselves. However, when we look at examples of companies that incorporate CSR in their core business, it becomes evident that consistent delivery on the mission is what drives the growth and innovation.
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For a company like Allbirds, for example, a sustainability mission has created a powerful story about how CSR creates value for business and the planet. Allbirds’ words are backed by a supply chain that focuses on regenerative agriculture, renewable energy for production, and a carbon emission reduction strategy that invites accountability. The story, paired with tangible examples of its commitment to sustainability, fosters loyalty among eco-conscious consumers—a demographic that continues to grow each year. Once just a kickstarter and challenger brand, the loyal consumer base it built has resulted in a $4.1 billion valuation and the raising of over $300 million in its IPO last year.
Companies that link social impact efforts with core business initiatives signal their own foresight and ability to differentiate from competitors. IKEA had built its reputation on budget-friendly, easy-to-assemble furniture. In exchange for affordability, the lower quality materials meant these products would end up in landfills more quickly. Recognizing sustainability as a fast-growing priority for consumers and employees, IKEA is now focused on circular economy products. This translates to designing products for reuse and launching refurbishment and buy-back programs. They also entered the energy-storage and home solar business, which grew by 29 percent in 2019.
Merge to deepen the impact
When CSR becomes separate from the core business, the focus on impact often becomes splintered. Anyone who has done cursory research of CSR initiatives, even among Fortune 500 companies, knows that they often resemble a grab bag of disparate causes united by broad values like “integrity” and “service.” The result is a shallow result on the social cause and a missed opportunity to engage customer and employee talent and multiply the impact.
When CSR becomes separate from the core business, the focus on impact often becomes splintered.
On the other hand, brands that bring CSR under the lens of the company’s central goals and expertise are able to harness their greatest engines for social innovation. Mastercard is a company that understands this better than most. Its City Possible initiative, which reaches 500 communities in 50 countries, redefines public-private partnerships by connecting city experts with academics and business leaders to tackle complex urban issues that require a great deal of expertise and collaboration. One major success from this has been the Mastercard City Key, which allows residents to access financial disbursement and city services like library access and transit funds through one secure and convenient card. These partnerships are creating goodwill for businesses, trust in communities, and real business growth opportunities.
“Kind capitalism” or “conscious capitalism” are terms that often make their way into thought pieces on this topic. This is not the story that I believe the world needs or one that most audiences would trust. Audiences are not naive enough to believe that capitalism is the hero that will solve the litany of issues our world faces today, particularly when it has been the driving force behind many of them. However, what does feel realistic and possible is a world in which business leaders, boards, and employees see the value in reimagining CSR and business as complementary engines of innovation and growth. In pursuing both in tandem, we can strive for a future where the right thing to do is also the best business decision.