When it first appeared in the 1960’s, corporate social responsibility by definition meant a “corporate ethic strategy”. In his 2012 article “Defining CSR: Problems and Solutions". Benedict Sheehy defines corporate social responsibility (CSR) as “"international private business self-regulation." Both of these definitions are vague and fail to focus on all that CSR initiatives are meant to achieve.
In our opinion, Business Dictionary does one of the best jobs in describing corporate social responsibility as meaning:
- A company's sense of responsibility towards the community and environment (both ecological and social) in which it operates.
- Companies express this citizenship through their waste and pollution reduction processes,
by contributing educational and social programs and by earning adequate returns on the employed resources.
In large part, due to the lack of a clear definition, companies were able to develop CSR programs that served their interests more so than doing good socially and/or environmentally. Until recently, there were three main CSR strategies that businesses employed to potentially gain a competitive advantage:
1) CSR as corporate philanthropy: providing funding and skills with minimal strategic impact
2) CSR as risk management: compliance with status quo and supporting relationships
3) CSR as value creation: promoting sustainable business/partnerships through shared values
Companies began implementing these strategies when they noticed that promoting their socially responsible efforts, no matter how self-serving, could help to attract and retain customers and boost their bottom line.
However, as more companies shifted their business practices to include elements of CSR, mindful consumers started to be more critical of what they considered to be a socially responsible company. Major firms such as McDonalds and RJ Reynolds, both of which laude the corporate social responsibility benefits of their work, have come under fire for “greenwashing” in an attempt to hide the negative effects their main products and services cause to the general public.
The backlash that has been caused by stories like these has caused many businesses to reevaluate their CSR strategies. This has led to the creation of the concept CSR 2.0, a reform of the previous business model be more impactful, and sustainable. Initiatives now range from corporate citizenship to long term programs or independent spin off social businesses that were built initially as projects.
The characteristics of corporate social responsibility 2.0 are often described using a code, goal and key indicators to explain what the company is looking to achieve:
1) Environmental Integrity: Creating and protecting sustainable ecosystems through the use of renewable energy & resources and creating as close to zero waste as possible.
2) Contribution: Stakeholder orientation via philanthropy, fair labour practices and supply chain integrity.
3) Good Governance: Institutional effectiveness that creates employee engagement through leadership, transparency and the promotion of ethical conduct.
4) Value Creation: Economic development by investing capital and creating beneficial products in an inclusive business.
A number of major companies have adopted the principles of CSR 2.0, experiencing the business benefits while at the same time sustainably aiding local communities around the world. Home appliance giant Electrolux partnered with World Chefs to create Feed the Planet. Microsoft, following in the footsteps of founder Bill Gates, has donated over $1 billion in cash grants and technology to NPOs around the globe in an effort to empower and build stronger more resilient communities.
By adopting these principles, small businesses and global “big players” are creating a sense of “corporate citizenship” and helping to establish projects that work for “good” in a sustainable manner.
As we’ve seen, there has been a great deal of change in CSR over the past sixty years. We’ve transitioned away from an introverted ethics strategy to one that focuses on the triple bottom line. With investment in innovation and sustainability likely to continue for the coming decades, companies looking to remain viable in the long-term will need to adopt the principles of CSR 2.0 along with the values they represent or face being exposed to a much more critical and connected global market place.