When it comes to the matter of corporate social responsibility (CSR) – or corporate sustainability in broader terms – most businesses (like politicians) campaign in poetry but govern in prose: in other words, they talk a good game about embracing green initiatives (beneficial to their employees, consumers, and industry) - but in actuality, take the path of least resistance and don’t walk this talk.
Ever since the premise of businesses championing social good bubbled to the surface of the world’s collective conscience, an internal corporate dilemma was birthed: the comingling and ideological tug-of-war between two seemingly hostile realities – profit and purpose.
Historically, pundits have dismissed the notion of such sociopolitical intercourse. In his 1970 New York Times essay, “The Social Responsibility of Business is to Increase its Profits”, renowned economist, Milton Friedman, sternly debunks the said consideration:
“The discussions of the "social responsibilities of business" are notable for their analytical looseness and lack of rigor.”
That famous remark unfortunately remains the operational bedrock of most businesses till this very today.
Considering the progress we’ve made thus far why then does the “Friedman philosophy” still ring true? The following misconceptions and challenges should offer a lucid explanation:
- There’s no money in CSR efforts
Despite numerous reports and studies which provide empirical evidence of the financial girth of companies that integrate sustainability into their core business structures, companies for some peculiar reason, stubbornly embrace the banalities of “business as usual” – one of which posits the unprofitability of investing in sustainable efforts; a mantra that incites stagnation.
- Fear of absorbing short-term loss for long-term gain
The amalgamation of the CSR prototype into an existing business model, most times, requires a major operation overhaul; which in turn necessitates substantial financial investment. This would mean that companies might experience a slight dip in profitability pending the time the new sustainable strategies take root. Such intermission is what typically serves as a point of trepidation for business executives and shareholders, hence, the reason for their glacial adoption.
- The murkiness of measuring sustainability
There has been a well-documented debate over the quantification of corporate sustainability. As stated in their book, “Sustainability Indicators: Measuring the Immeasurable?”, business co-authors Simon Bell and Stephen Morse highlight one of the drawbacks of measuring sustainability:
“Quantification, (of sustainability), does have limitations, and clearly it is not possible to measure all human experience… and a desire to incorporate the richness of humankind’s complex interrelationships with nature, SIs (Sustainability Indicators) are still a classic reductionist set of tools based on quantification. We find it ironic that those who scorn attempts to give value to sustainability… still employ a language that has quantification at its heart. This has clear relevance… to the whole sustainability debate. Can we really use simple SIs to gauge a complex issue as sustainability?”
- The trepidation of transparency
One of the many “treats” in the CSR goody bag is transparency – many companies are frightened of this kind of vulnerability. Gone are the days when corporations make lofty sustainability claims without authentication. We live in a trust-but-verify climate where the general public (via the internet) can separate the wheat from the chaff. Volkswagen’s recent “Diesel-gate” scandal is testament.
- Lackluster external collaboration
Getting key external players – such as shareholders and/or suppliers – onboard to support the disruptive tactics of corporate social responsibility can be a long and painful road; mainly because it’s perceived as a herculean endeavor.
Gloom and doom aside, there have been extraordinary strides made by some top-tier conglomerates in the sustainable business movement. These establishments have untangled themselves from the noose of sameness by making a resounding case for businesses grounded in sustainability and social good: they aren’t only a worthwhile structural substitute to the status quo, but are also more lucrative.
“Green Giants: How Smart Companies Turn Sustainability Into Billion-Dollar Businesses” a book by E. Freya Williams, she outlines nine different companies (some which include Unilever, Tesla, Whole Foods Market, Chipotle Mexican Grill and Natura) that have:
“...succeeded in building wildly successful businesses while selling products and services designed to help us live happier, healthier, more environmentally conscious lives. Together (these Green Giants) represent over $100 billion in annual revenue and outperform their competitor in the stock market by 11%.”
Dissuaded by the enormity of the mentioned corporations? Here are some examples of small to medium sized businesses that are also championing the corporate social responsibility mantra:
An online shopping/clothing brand that espouses “Radical Transparency” – a belief rooted in three simple principles: “Know your factories. Know your costs. Always ask why.”
A mobile-only app that is on a quest to transform the live music-ticketing sector (an industry fraught with a variety of hidden - booking, transactional and printing - fees) campaigning with a monumental selling proposition – zero fees.
- Green Glass Recycling Initiative Lebanon (GGRIL)
A CSR project spearheaded by a Lebanese engineer - Ziad Abichaker - that “diverts green glass from landfills by providing work for the last 6 glassblowers of Lebanon.”
To a Chief Financial Officer (or anyone else for that matter) reading this piece, you’re probably asking yourself this question: “Of what relevance is this to me?”
For starters, I trust that you’re now unequivocally convinced about the holistic vigor and transformational effects that the implementation of corporate sustainability efforts has on a business.
Secondly, I’m genuinely hopeful that you’re inspired to be the activist for worthwhile CSR efforts; which means formulating innovative, concrete, and realistic action proposals that reignite the way you do business.
And most importantly, as the purveyor of strategic change, you are challenged to add a new line into the financial ledger that says - give a damn!.
Written by Paul Podbury @ Locomote