Framing CSR (I): regulation, normalization, certification…

Has CSR got out of hand? We seem to think it has. Many efforts are being made to delimit, define, organize, reorient or certificate Corporate Social Responsibility, as if we were trying to tie a plant to a stick to keep it growing straight.

It’s easy to understand why it seems necessary to take some action in order to revive or reinvent CSR. The concept has lost credibility due to widespread misuse and abuse. Recently, Professor Wayne Visser has initiated a set of articles for CSRwire about the “CSR death”. He suggests a debate: should we kill CSR off before it distracts us from the changes companies really need or is it possible to reinvent the concept and the practice of CSR?

Reinvention proposals cover a number of controlling options, from regulation to certification, including compulsory reporting. There seem to be few people in favor of the completely voluntary nature of CSR, which is quite surprising because companies’ social responsibility, as people’s individual responsibility, must come from inside out: any imposed behavior can be called a lot of things, but not “responsibility”.

According to its own nature, CRS is the voluntary commitment to applying ethical standards beyond regulations. This perspective makes it possible to distinguish between leading and short-term oriented companies, but it’s hardly compatible with a regulatory approach.

However, I agree with the idea of improving legislation, but only after setting clear boundaries on what can and cannot be considered CSR. Anything that can and must be regulated in order to set a level playing field probably shouldn’t be treated as CSR. Many environmental issues would be included in this category: damaging our habitat can never be a choice. In last decades, vertiginous technological and economical development has allowed businesses to expand into non-regulated areas that have been tackled from a CSR perspective, usually on a voluntary way and with different degrees of commitment and success. However, as these behaviors move from voluntary to mandatory, CSR will have to find new fields of activity which are consistent with its discretional nature.

In coming entries we will keep on talking about advantages and disadvantages of other alternatives for framing CSR: standardization of public information, reporting obligations, accreditation, assessment of social impact… As for regulation, instead of tying a stick to CSR plant, it might be more fruitful to clean out weeds and let the plant grow freely. 

The importance of communicating CSR: publicity in the service of social improvement

When talking about financial education or social responsibility, a low profile is the best way to fail in reaching the goals.

In our last post we remarked that CSR cannot be approached as a cosmetic exercise or a mere declaration of intent. Today, easy access to huge amount of information helps us notice when an initiative is a bubble with nothing in it and only pursues commercial objectives. All smoke and mirrors: that’s not true CSR but just social marketing. In the long term (and probably in the short term as well) it can be highly damaging to the company in terms of credibility. Instead of social reputation, the company gets back skepticism, indifference or, in the worst scenario, distrust.

However, if the company is up to a really good Corporate Social Responsibility project, proper outreach is not only convenient but a key issue to accomplish the goals. Genuine CSR actions are aimed at real people and are meant to encourage changes; therefore it is essential for success to reach the target groups and motivate them to tackle the required actions.

Unfortunately, financial education provides us with a good example of the opposite situation: there are a large number of quality projects fading away because the target groups are not even aware of their existence. Public agencies and private companies develop Internet sites, organize courses and seminars, give financial support for a range of research and studies on people’s financial literacy… but, at the end of the day, the outreach and effectiveness of those actions are far below expectations. Maybe a creative and well designed communication is the missing element for bridging the gap between well-intentioned purposes and real accomplishments.

In short, a good communication strategy is not only essential but beneficial for all parties: on one hand, it facilitates social progress by improving the actions' outreach and effectiveness; on the other, it allows companies to get a well-deserved reputation as community leaders.

Financial education and social responsibility: a win-win relationship between the company and its environment

The traditional conception of Corporate Social Responsibility (CSR) is in the process of being reconsidered. First thought up by Public Relations departments, nowadays leading companies are fully aware that CSR is far more than an investment on reputation and social brand building, as important as it may be. Beyond that goal, CSR is the cornerstone of a win-win relationship that can only be beneficial for all the parties involved.

With all due respect to Mr. Ortega y Gasset, companies are themselves… and their circumstances. A firm cannot work and survive in isolation from the social environment in which it operates. The soundness of surrounding circumstances is the foundation for sustained success. Stefan Schmidheiny, founder of the World Business Council for Sustainable Development, said: “There are not successful companies in failed societies”. But, since it is not possible to tackle every area of improvement at the same time, where should CSR efforts be ideally focused?

Complexity of corporate framework provides companies with the opportunity of choosing between a wide range of possible fields for CSR actions, according to their needs and preferences: environmental preservation, education and social progress, art and culture, etc. But it is good to remember that the more connected to people’s needs, concerns and realities, the more productive those initiatives will be.

At this moment, impact of global crisis on households’ budget has highlighted, more than ever, the widespread lack of financial literacy. Individuals’ feelings of uncertainty and fear for the future are influencing in a significant way the usual patterns of financial behavior. The changes in savings, consumption and investment habits can make it more difficult to overcome crisis in some markets and business sectors. In this situation, both private companies and public agencies and institutions are equally concerned about the need of developing effective financial education initiatives.

In our next posts we’ll talk about the news, trends and approaches of CSR focused on financial education. We encourage our readers to participate by posting comments or suggesting any topic of your interest.