CSR is Dead, Long Live Social Enterprise

Wednesday, August 10, 2011

Corporate social responsibility (CSR) has been around as a term since the 60s but it really came to prominence in the last decade when large multinationals began to adopt the phrase to demonstrate that they were serious about delivering a positive social impact on the communities in which they operated.

Some cynics felt that CSR was simply a marketing exercise, an attempt to reassure employees, garner consumer favour and stave off government regulation. Other more hawkish economists such as Milton Friedman were uncomfortable with the notion that companies had any moral obligation to society, famously stating “the social responsibility of business is to increase its profits”.

To communicate their efforts companies such as PepsiCo, Shell and Barclays began to produce CSR reports which laid out all their positive impacts from charity donations and employee volunteering to supporting renewable energy production and promoting diversity. CSR reporting became so popular that even much maligned companies such as British American Tobacco felt that they too needed to communicate the benefits of their operations to society.

As climate change and the environment came to the fore, CSR reports quickly evolved into sustainability reports and their emphasis became more focused on driving low energy solutions and mitigating the environmental impact of a company’s operations.

While the language and emphasis of CSR has changed, one key problem remains. The adoption of CSR has been and continues to be reactionary, a response to a growing concern from employees, customers, and to an increasing extent investors, about the conduct of businesses. The principal drivers have been largely external rather than internal, calling into question whether those principals are core to the companies DNA.

The explosion in popularity of social enterprises recently is a direct consequence of the inability of existing companies to grasp the new reality that a company’s core purpose must be to deliver positive social impact and not to simply minimise negative impacts while ultimately focusing on maximising profit in the short-term.

Source: Guardian.co.uk (link opens in a new window)