The Schumpeter column in this week’s Economist is well worth reading for its take on the evolving nature of Corporate Social Responsibility.
Using an upcoming sustainability conference in Rio de Janeiro (following the UN’s Rio +20 earlier in June) as a news hook, the article makes the claim that CSR has “a hard-earned reputation for flakiness,” known for “agreeable-sounding platitudes” and the prevalence of the conference circuit. That’s a criticism you might expect from our friends at the bastion for free enterprise and markets that is the Economist. But the article goes on to describe how CSR is evolving from managing corporate reputations (through greenwashing and the like) to embracing business fundamentals through the lens of social innovation, such as supply chain management and sustainable product design.
For Schumpeter, sustainability has emerged as the loudest buzzword in the CSR vernacular. The column cites some interesting statistics: A recent MIT Sloan Management Review survey found that last year 67% of managers believe that sustainability is a key to competitive success, up from 55% the year before. The business principles are clear: Business managers have realized that making the most of finite resources is good business both in the factory and at the consumer’s home. Unilever has created detergents that use less water when doing the laundry, for instance. Because many facets of sustainability can be measured—think of carbon emissions, water and waste—businesses can modify products, packaging and their supply chains to make measurable improvements.
The column’s conclusion sums up how the established business order is coming around to CSR and sustainability. I would probably do best to quote this in full:
In the days when CSR was just about public relations, it was probably bad for the reputation of business in general. Companies seemed to concede that profitmaking was a bad thing. Too often, they bowed to anti-business activists and made ‘amends’ through good works. Today’s iteration of CSR is less self-abasing and more constructive. It is encouraging businesses to become more frugal in their use of resources and more imaginative in the way they think about competitive advantage.
The article raises a number of great questions about how to approach CSR, namely whether an effort is essentially playing defense or integrating social responsibility into how one does business. Some of the companies cited in the article, like Nike, appear to have done that very well in recent years, especially in light of its shortcomings in the 90s around the labor in its factories. Another good reminder that sometimes the best defense is a good offense.