CSR Defined The idea of corporate social responsibility (CSR) has come a long way since Nobel Laureate Milton Friedman defined a corporation’s social responsibility as generating profits.
In the association community, CSR obviously has more than this single dimension. Associations (particularly trade associations) have a responsibility and an opportunity to help their members understand and practice corporate social responsibility. And because associations also are corporate entities, it’s incumbent upon them to lead by example and be good corporate citizens.
Several factors have contributed to the evolution of CSR. For example, changing societal values and consumer demand for companies to be on the right side of social justice issues and good stewards of the environment are moving companies beyond Friedman’s definition. Accounting scandals at WorldCom and Enron a decade ago as well as the more recent financial and mortgage meltdown have put new demands on transparency and accountability inside and outside of the boardroom. With this increased awareness of corporate social responsibility comes another effort to further evolve, define and put it into practice.
Surprisingly, CSR can be a controversial topic. Supporters argue that a strategic approach to CSR has benefits related to risk management, cost savings, access to capital, customer relationships, talent management, and the capacity to innovate. Because good CSR programs engage with internal and external stakeholders, they enable enterprises to better anticipate and maximize fast changing societal expectations and operating conditions, driving new market development and creating opportunities for growth. With the right approach, successful CSR programs yield benefits for society and the corporation.
Skeptics (or outright opponents of CSR) argue that corporations are first and foremost responsible to their shareholders and have a responsibility to manage to profitability. By operating profitably, corporations create jobs and fuel economic growth that ultimately benefits society. These skeptics argue that diverting attention and resources to other goals goes against a corporation’s fundamental purpose and effectiveness. In essence, CSR may be a beneficial by-product of corporate activity but should not be a singular focus.
While academics and others will continue to debate the pros and cons of CSR, the reality today is that there is growing public expectation that corporations will be significant players and models. The growth of social and digital media has “turned up” that public expectation; the conversations companies have with shareholders, customers, prospects, etc. have expanded. Clearly, the era of the one-way street, when companies “talked to” shareholders and customers is over. Today, consumers and shareholders have the ability – and some believe the right – to engage a
corporation on an issue including issues related to a product, how that product is produced or how (and where) a particular company invests its resources, among others. The definition of a company’s shareholders or audiences has become both magnified and fragmented, allowing just about every consumer to have an opportunity to “talk”
with a corporation.
In response to this heightened conversation, it’s in a company’s best interest to engage with its publics. At the very least, companies have a responsibility to minimize any negative impact and maximize any positive impact while adhering to sound financial and operational practices.
Associations and CSR
As businesses and professionals identify and define their CSR role, they may well look to their trade or professional associations for advice and support. Even if members don’t actively seek input on CSR, their associations have an opportunity, even a responsibility, to reach out proactively to their members to provide a valuable service in the following areas:
Education and awareness – As associations seek new ways to serve members in a tough economy, providing help with CSR may be an untapped avenue of opportunity. However, many associations may face questions from their members, the media or the public about whether the industry or profession they represent has a policy or program to promote CSR. Understanding what CSR is and being prepared to respond to inquiries is a readiness step in which associations can help their members. Provide basic educational and orientation material on CSR and make available links and other resources to more indepth information on your web site.
Providing support – If there is sufficient interest in CSR among members, consider providing assistance to members in getting educated, setting policy, and implementing CSR programs. Among the areas where advice and supporting material may be particularly helpful include:
- Policy – It is helpful to have an explicit policy statement about CSR as it relates to a particular industry or profession. Good advice to association members contemplating a CSR policy: keep it short and simple. A policy statement that is too complex not only is confusing but may invite unanticipated questions that are difficult to answer. Make sure there is someone (preferably more than one person) in the organization that has at least some background on CSR so that members have a starting point for information gathering. Collect examples of CSR policy statements to share.
- Program ideas and support – Collect information from members and others who already have CSR programs and make information available on lessons learned. Set up a simple, electronic clearinghouse for members to share information.
- “Greening” – The green movement has grown rapidly in recent years. Many associations have incorporated “green” as they plan major meetings and select cities and facilities. This is a specific example of a “program idea” that is relatively easy to implement and is a good example of incorporating CSR into an existing activity. Those who have made it a point to “be as green as possible” in planning meetings often include this in their promotional material as a selling point to members.
- Pitfalls – Make sure the information provided to members includes pitfalls to avoid, the most important of which is to make sure you can live up to your CSR policy. It is better to have no policy or program than to have one in name only. The now famous Enron ethics policy is a prime example of such a failed policy.
Several forces – consumers, the marketplace – among others – will drive CSR’s ongoing evolution. If done well, a CSR program can provide associations with a means of differentiation – and promote the concept of doing well by doing good.