Corporate Social Responsibility Reports Fail to Prove Business Case

Corporate Social Responsibility reports almost never include data that supports the business case for CSR strategies. Unless business can tie the benefits of CSR to the bottom line it will be jettisoned during tough financial times. Or worse, CSR will act as an enabler much like political correctness allows racism to flourish, and religion can mask hatred growing in our hearts.

Doing Good, And Wasting Time

Industry reports, marketing reports, stock reports, annual reports.....really, how many of us like to read them? Most of the time, the information is valuable enough to merit the minutes (sometimes hours) spent wading through small type and decimals. All too often however, the time would feel better spent doing something else. It’s bad when the information itself is incorrect. Worse still, when it’s simply naive.

CSR reports. Why, oh why, is naivete the norm? The information is available, the compilers are smart (smarter than me, I’m sure), the readers are vested shareholders (and smart too, no doubt). There is simply no justification for reports on Corporate Social Responsibility to be so disastrously void of compelling data.

Let’s back up a little....

The other day I spent some time talking to Jim. Jim was hired a year ago by a health organization to set up their very first Employee Volunteer Program. 12 months later, Jim and his boss stumbled through this unexpected interaction:
Boss: “Uh, know that Employee Volunteer Program?”
Jim: “Yup.”
Boss: “Well, we need to sort of....downplay it for awhile.”
Jim: “I’m sorry....what?”
Boss: “Yeah....with the financial crisis and all....we’re not really sure where the program is know how it is....”
Jim: (Incredulous pause.) “So....don’t talk job?”
Boss: Um, well, leave the EVP info out of the newsletter this month...uh, next month, too.....and then we’ll talk. I’m sure everything will be fine.”
Jim: (Sigh)
Jim’s sigh was accompanied by the depressing realization that his job, through which he had so far found meaning and purpose, is merely a public relations ploy. Corporate Social Responsibility is only as good as it makes the company look. Why else do most CSR employees report directly to the PR or Marketing department?

Actually, a good CSR strategy will almost always act as an effective public relations tool. Customers, shareholders and employees all feel more comfortable supporting a company that gives a damn. It’s just good business. It’s this aspect of the business that you’ll find outlined in most CSR reports. CSR = Look Good for the World. And that’s about it. That’s all you’ll find. Are there any other benefits? Any other reason to be socially responsible? If there are, you sure won’t find it in the report. It’s short-sighted. Small-minded. Naive.

I hate to say it, but I have an example of just such a report.

Fast Food Solving World Hunger

Yum! Brands, Inc. is the world's largest restaurant company, and the parent company of franchises like Taco Bell, Pizza Hut, KFC, A&W. On December 9th, they released their first Corporate Responsibility Report titled; “Serving the World.” It’s good, actually - informative and interesting with an attractive lay-out. The report covers a number of areas within the company which connect to corporate responsibility with one primary focus: efforts to alleviate world hunger. Apparently, they are doing a good job of it. BusinessWeek has named Yum! Brands as one of the "Top 15 Companies for In-Kind Corporate Philanthropy."

Here are a couple of the year’s amazing accomplishments Yum! listed in their report:
  • 1.6 million people saved from starvation last year.
  • 36 million dollars donated to the United Nation's World Food Programme and other hunger relief agencies.
  • 1.4 million employees mobilized in the effort to stave off hunger.
Yum! is a company that deserves to be commended - they’ve done fantastic work.
One issue: As a shareholder, I have to ask why the company is giving away my money. That’s right, my money. Why is the company diverting the productivity of 1.4 million employees toward initiatives that don’t affect the bottom line? Hey, don’t get me wrong, I want to see good things done in the world. I’m just not sure the business that I invested in to bring a return on my investment is also where I want to give my charitable donation.

Tell you what, Yum! - you pay me my dividends and then I’ll donate directly to the causes of my choice. It’s simpler for everyone - don’t you think?

Unless, of course, your CSR program also benefits the bottom line. If there are more benefits to this program than “doing good,” it may be worth investing in. Has your program increased the skill sets of your employees? Can the rise in customer retention be connected to the program? Does the program effect the confidence of investors? According to the report, I’ll never know. (I should mention that Yum! does mention one statistic along these lines, the ‘Lost Time Injury Rate’, which scores 20% better than industry standards).

Doing Good Isn't Good Enough

It’s not Yum! that’s the problem. This short-sighted naivete seems to be rampant across the business world. In order to move effectively into the rapidly progressing world of social responsibility, it’s time for business’ to expand their vision. CSR, or specifically corporate volunteering, is not primarily philanthropic. As long as industries in the charitable arena are presented only as, “we’re good citizens and we can prove it,” we will undermine the value and sustainability of those efforts.

Want to look good as a company? There are a dozen quick and easy tactics to employ, but CSR is not primarily a marketing tool. Use it that way if you can, but understand that the best value of CSR is to be found in enhancing business operations. Consider corporate volunteering - which is my area of expertise. A proper CSR report would identify the business elements that the corporate volunteering program enhanced, such as:

  • Employee skill development
  • Leadership development
  • Increased teamwork across job families and throughout hierarchical levels in the organization
  • Employee productivity
  • Recruitment
  • Retainment
Companies must begin including the business case for CSR in the CSR Reports. How do you do that? I’m glad you asked. We’ll discuss it in an upcoming series of blogs “Corporate Volunteering: The Meaning and Madness”. See you then.

Views: 245

Comment by Michael Blondino on December 19, 2008 at 4:28
This is a really great piece.

Corporations reporting data on the development they provide to their employees is a great concept. A short throw from that, is their using their business concept in appropriate scale in the developing world, and empowering people who will go through their training. I'm not talking about a micro-McD's, as much as someone like McD's getting behind helping small, safe, and trained vendors selling food products. What fantastic good could be done if in inner city markets the fly infested cholera epicenters could be replaced with profitable job creating businesses that know how to maintain hygiene and the bottom line. Street "ice-cream" for Baskin-Robbins or Ben and Jerry's, there is such a great marketplace in the developing world for small business.

It may be a small point of disagreement, but I'm not sure that Yum needs to lower its price so we can support our own charities. I think if the market supports their price, and they want to attribute a portion of that margin to their own branding of help for the world, I think that's a good thing. Case in point, Pacific Crest Enterprise, in Washington State makes cabinets. They embraced a program in Goma, in the D.R. Congo. They have everyone from the CEO to the cabinet maker, accountant to salespersons, giving and going voluntarily - and they do! There are reminders throughout their facility, and their whole thing is helping poor farmers own property. Frankly, it's pretty impressive. And THAT is what CSR is about. It's not a token, window dressing, but a fundamental value that takes time, effort, sacrifice and engagement from the top down. I was really pleased reading the journal of the daughter of the owner who went with him to Congo. Sure made me feel good about recommending them to some of my clients.

In my experience it takes more than picking a cause, it takes passion at the top to alleviate some hurt in the world. You can't put in what God left out; a business that has no respect for people cannot cultivate corporate philanthropy simply by tagging themselves with a charitable merit badge as you noted.

The philosophy that has guided our enterprise creation effort is simple DBDG: Do Business and Do Good. And what we do works but we didn't start on the business side, we started in philanthropy. For us it was a challenging but fundamentally congruous migration of effort. What is most amazing is that what we do is wildly profitable, though we're turning the profit back to the community for social development. Maybe coming from the other side - the business side - corporations need to focus on what congruous migration of help to humanity can be found in their model or in their product.

I enjoy your postings and I'm looking forward to the next one!

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