We expect too little from firms’ CSR activities. In my writing I have tried to nudge higher-order visions of CSR: from sustainability to regeneration; from doing no harm to doing good; from financial sustainability to longevity; from profit to profitable solutions for the problems of people and the planet; and now, from corporate social responsibility to corporate social performance.
Leanda Care – Honorary Advisor | Macau Institute for Corporate Social Responsibility in Greater China (MICSRGC)
The problem with the term ‘responsibility’ is that it has an imprecise temporal characteristic, as it implies a duty to deal with something in the future. It is a state of being, not a state of doing. We can be responsible without achieving much, especially when it is self-determined. Corporate Social Performance, however, demands accountability and measurable evidence. Such performance is promoted by the Environmental, Social and Governance metrics under reporting requirements of securities markets as discussed by Jenny Guan in MB’s July issue, but not all economic activity will fall under these guidelines.
Corporate Social Performance manifests in broader activities than is commonly understood by CSR, especially more than the low-level entry stage forms of philanthropy which Carlos Noronha reminded us of in June’s MB issue – cash, gifts and medical supplies. As Gary Cohen, Executive Vice President, Global Health and President of the BD Foundation, points out in an interview in a special issue of the Rutgers Business Review, socially oriented business activities fall into four broad areas: the cliched philanthropy so favoured in Macau, corporate social responsibility, shared value creation, and advocacy.
Within this broader concept of Corporate Social Innovation, CSR is about a company using its resources or adapting its processes outside of its commercial activities to benefit society. These acts generally cost businesses, although these can be ameliorated by reputational benefits, reduced financial risk or efficiencies such as emissions and waste reduction.
Shared value creation, on the other hand, offers mutual benefit to companies and society. A firm will use or develop products and services that also solve problems within the community. The concerted efforts of Macau’s casino businesses to train staff with the help of leading-edge experts, to upskill SMEs, and the introduction of tourism drawcards in gastronomy and the creative arts are examples that enhance community and individual experience.
Through advocacy, influential companies shift public policy and regulations to strengthen society, protect individuals and the environment. Public-Private Partnerships can solve pressing community and environmental problems such as waste-management (a critical issue for Macau) and logistics.
CSI integrates all these activities into a cohesive and coordinated approach for social good. Social innovation is not simply about bolting philanthropy, CSR or sustainability onto business activities but is part of the overall business strategy. Ideally, each of the levels of activity are aligned so that, for example, social and political actions are not in conflict – a company does not give with one hand and take with the other.
There is a growing acceptance, that by virtue of their capabilities, businesses have a role to play in addressing the world’s most challenging problems. Indeed, there is a shift in expectations about the purpose and role of companies in society, not just lead by activists or well-meaning commentators but by investors, political leaders and scholars.
A corporate shift to integrated social innovation, however, does not come easily and, as Gary Cohen maintains, senior executives aiming for high levels of social performance and innovation need skills more akin to a diplomat than to bottom-line focused short-term profit takers. These corporate diplomats know their local and global village intimately. They know the townsfolk and their businesses, their livelihoods, their distress, their culture and values, and how to contribute to a thriving inter-connected community.
Fortunately, CSI is not mere altruism, as increasing evidence shows that companies that impact positively on their broader environment are more successful across both financial and other measures: employees are better engaged and loyal; customers and investors are attracted to them.
Beyond the business-case justification, there is pressure on companies to reflect deeply on the shifting mainstream political discourse. The applecart is being overturned with a sense of joyous abandon. The dogma entrenched in Western culture that humanity is intrinsically selfish, and the perspective that businesspeople are profit-taking mongrels waging competitive battles by making tough and unsavoury decisions for short-term success are being rewritten. Should we continue to believe this dogma, government policy and corporate strategies will continue to accord with that dismal view.
The current alternative being played out is away from businesses and individuals as being separate and takers from, and exploitative of, their communities and environment, to a perspective where the term ‘humankind’ is apt. This is where benefits come from collaboration and from incorporating social impact into both market and non-market strategies, operations and agendas.
The vision through the Overton Window is changing. Jeremy Lent, author of “The Patterning, Instinct” asserts the values that have been destructive have been based on a sense of separation. The global pandemic has made clear just how interconnected we are: person to person, business to community and country to country. Rutger Bregman, author of “Humankind: A Hopeful History”, another leading thinker in this field, reckons that “deep down, most people are pretty decent.” These are the values and convictions that will redefine the interconnected role and purpose of corporations.