From philanthropy and risk management to sustainable business development

Many companies are not capitalising on their corporate sustainability and responsibility (CSR) efforts. International social business advisor Tania Ellis explains why.

Philanthropy to genuine corporate responsibility
Most sustainability managers can explain what their CSR programmes are, but only few know how to show the social and financial returns they get from their corporate responsibility efforts. Image: Shutterstock

“I am so relieved to see that economy is one of the three dimensions of sustainability!,” exclaimed a board member, when a CSR manager recently presented his corporate sustainability and responsibility strategy for the board’s approval. 

Because even though many managing directors say that sustainability and corporate responsibility are priorities, the focus of the board is usually on the financial key figures. CSR is still something that many associate with nice-to-have philanthropy or necessary risk management, rather than the financial bottom line. 

In other words, they have difficulty seeing the business case of CSR. There are two main reasons for this: 

Many companies may focus too much or too long on how they can comply with codes of conduct, principles and guidelines rather than on how to build on top of their compliance to generate value-adding business activities

1. The art of quantification 

Many sustainability managers are currently struggling with showing the business value of the company’s sustainability and responsibility efforts to top management. My experience from the practitioner field is that most can answer what they are doing with their CSR programmes, but only few can answer what they actually get out of their efforts, because they are not measuring on the social and financial return of their CSR investments. 

To many, the challenge is often that CSR is something that started in one corner of the company, as part of, for example, human resources, communications or public affairs. So when the efforts were first established there, it can be hard to lift the company’s CSR activities up on a business strategic level. 

Consequently, a lot of our current consulting assignments consist of helping companies develop a business case for CSR, so that the company’s sustainability and responsibility efforts reflect and address the company’s particular business challenges, as well as opportunities in the industry and markets it is operating in. 

2. The Compliance Trap

Another challenge that I am currently seeing in many companies working seriously with CSR is what I call “The Compliance Trap”.

The company’s top management may have put CSR on the agenda because their national legislation requires this. Or maybe, the company has become a member of UN’s Global Compact business network in order to document that they work in accordance with international principles and guidelines.

This admittedly gains ground for putting the company’s CSR efforts into system. The only danger is that many companies may focus too much or too long on how they can comply with codes of conduct, principles and guidelines rather than on how to build on top of their compliance to generate value-adding business activities.

In other words, many end up staring themselves blind on risk management rather than seeing the business development opportunities. This is often reflected in the company’s communication with focus on reactive words like to minimize, comply with and avoid rather than on proactive words like to optimize, develop and advance

This is a real pity, since it means many companies are losing out on potential business gains such as more efficient operations and processes (such as energy efficient work routines), stronger employee engagement, more effective communication and branding, differentiation from competitors and innovative product development. 

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