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Diahanne Rhiney's picture
Diahanne Rhiney
Corporate Social Responsibility: how many are genuinely doing it well?

CORPORATE SOCIAL responsibility has now become quite mainstream. A vast range of activities come under the goodwill umbrella ranging from volunteering in the local community, sponsoring villages in needy third world countries to saving the planet. Large companies are now going out of their way to tell the world about their good citizenship.

They are pushing out their message on their websites and in advertising campaigns. Their chief executives queue up to speak at conferences to explain their passion for the community or their new-found commitment to whatever the cause may be.

Most companies engage in these types of activities, but how many are genuinely doing it well and how many are using it purely as a great PR tool? Either way, it appears that ‘corporate responsibility’ (as most companies now prefer for wider scope) is booming.

A survey carried out by The Economist showed that corporate responsibility has risen sharply as a priority within the corporate arena. This does not mean that executives have discovered their need to give back or that CSR has suddenly become a great idea, it simply shows that in practice few big companies can now afford to ignore it.

CSR has also provided an opportunity for think tanks and consultancies to thrive and governments are taking an ever keener interest. In the UK, the 2006 Companies Act introduced a requirement for public companies to report on social and environmental matters. And the United Nations regularly promotes corporate responsibility worldwide through a group called the Global Compact. Furthermore, in education, business schools have added CSR modules, as the demand for these activities has increased over the years.

So what has caused this boom or increase in activity? Simply put, companies have to work harder to secure their reputation and the environment in which they do business. Scandals such the BP Deepwater Horizon oil spill and endless banking scandals and many others undermined trust in big business and in most cases have led to heavy-handed government regulation.

This has also increased the army of non-governmental organisations (NGOs) ready to do battle with multinational companies at the slightest sign of misconduct. More than ever, companies are being watched and scrutinized about business dealings and staffing conditions. Therefore, images of a poor vulnerable child working on a piece of clothing with an expensive brand on it would be most unwelcome.

According to Columbia Business School, investors are also showing an interest, with $1 out of every $9 under professional management in America now having an element of “’socially responsible investment’.

As well as these external pressures, firms now face strong demand for CSR from their employees, so much so that it has become a serious part of the competition for talent. People now want to work at a company that is in alignment with their own values and ethos.

Arguably, CSR, in most cases still remains too unfocused, too shotgun, with no real connection to the business. Perhaps this is not surprising as trying to be good and do the right thing can be difficult as this often requires transparency. The question that most companies are interested in is - ‘Is there really competitive advantage to be had from having a CSR strategy?’

However, if done badly, it may just be seen as a fig leaf, which could have damaging effects. On the other hand, if done well, it is not some separate activity that companies do on the side, a corner of corporate life reserved for virtue it is just good business.

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