Can CSR survive the economic downturn?

In recent years, Corporate Social Responsibility has moved out of most organisation’s ‘discretionary spend’ pot and into the Boardroom as issues such as sustainability, climate change and resource conservation have come to the fore in civil society. But will the economic downturn bite? Will the corporate ‘green wash’ be peeled away to reveal that Britain’s businesses are just as focused on profit at any price as they ever were. And if so, what are the consequences for business and the causes they support?

Wayne Visser, Founder and CEO of CSR International writes extensively on the role of business in society. His view is that the underlying concept of CSR won’t be changed by the economic downturn, but that its practise – and some of its philanthropic edges – may change.

“Those organisations which have embedded CSR into their business strategies and operational practises won’t be changing the way they view CSR,” he told Connections. “Chances are, they’ll step up their activity. However, we may well see the end of CSR as corporate philanthropy. It’s an outdated model anyway, but still exists in many organisations.”

Asked where British business sits on the ‘philanthropy – embedded’ spectrum, Wayne was supportive of most endeavours. “Britain is one of the more advanced countries in terms of CSR – certainly when it comes to looking at larger organisations. Most have moved on down the road from philanthropy, and the last 10 years has seen significant codification and standardisation of ‘responsibility’.

“Organisations are now measured far more on their efforts in sustainability, energy use and the like and the new governance structures emerging in the wake of WorldCom and Enron have changed the face of corporate responsibility from this idea of giving to good causes to being a valuable and responsible member of the business community. Just as importantly, organisations are waking up to the economic value corporate responsibility can deliver.

“However, the changes to date have been incremental, and the progress remains slow. It’s a maturation process, and most organisations are now still at the stage of being consciously aware of their ‘responsibility’ efforts. Moving forward, the emphasis in CSR is around partnerships, with technologies such as web 2.0 enabling many more stakeholders to be involved in creating and driving sustainable businesses.

“I believe this will change the traditional shareholder value model of capitalism. Perhaps the downturn will prompt a more radical reappraisal of businesses driven solely by the profit motive in an unsustainable way.

“We are seeing change, and that can be helped both by peer pressure and by policy. In terms of peer pressure, indices such as the Dow Jones Sustainability Index enable corporations to rate themselves against peers in their industries. It’s not likely to lead to truly breakthrough changes in the way they do business, but can speed the pace of incremental change – and perhaps create tipping points.

“Governments too can advance the CSR agenda and President Obama’s election should lead to stronger policies, especially around climate change, that will offer far stronger incentives for western businesses to change their practises. For me, the key to the CSR agenda is not thinking in terms of ‘social’ responsibility, but ‘sustainable’ responsibility. We have to focus on creating corporate sustainability that will be delivered by responsible practice throughout the organisation.”

Bucking expectations

While many might have expected CSR to be in for a rough ride as corporate budgets tightened, the City of London’s Corporate Responsibility Manager, Carolyn Housman, who leads the Corporation’s City Action volunteering programme has noted quite the opposite since the credit crunch bit last September.

“We’ve seen a 500 per cent increase in new client activity, and 130 per cent increase in volunteering activity. CSR is so embedded in the City, that it’s here to stay, and businesses have definitely stepped up to the plate to cover gaps and shortfalls that have inevitably surfaced as some firms have gone out of business.

“I believe the economic downturn has really brought into focus how the City needs to be more active in supporting its communities. It has been gratifying to see those firms acquiring others both maintaining their own CSR initiatives and taking on those of the acquired, and we’ve also noted significantly increased CSR activity from law firms with many taking on the less PR-friendly initiatives.

“At individual and firm level, people are taking their responsibility seriously. Maybe there’s a bit of ‘Dunkirk Spirit’ at the moment, and I doubt we’ll see the level of growth sustained through 2009. But CSR is now so ingrained in the DNA of corporate culture that it’s now far-removed from the bolt-on of 10-15 years ago when it was easy to run off the funding if times got tough.”

As Carolyn continued, one of the keys for CSR’s sustainability is that the business case is now easier to sell. “CSR professionals have evolved and are now just as conscious of the economic benefits of CSR as of the traditional pillars of social and environmental responsibility. The best CSR professionals understand the economic drivers of business and can shape policies and activities throughout the supply chain to cut costs and increase profits without damaging reputation or responsibility. So at times like this, CSR teams are really demonstrating their value. “

Looking forward, Carolyn anticipated that change will happen in CSR. “Areas like sponsorship are the low-hanging fruit and are closer to corporate philanthropy. When existing agreements come to an end, I suspect some arts and sports organisations may find it harder to replace them. Equally, I expect CSR teams to slim down over the next couple of years. But that won’t be to their detriment as I also expect them to become more senior and closer to the Board.”

It would seem that far from pulling the plug on CSR, the economic downturn is putting ‘responsibility’ at the forefront of the business agenda.

This article first appeared in Connections magazine, Winter 2009