Boundaries of CSR

One of the concrete slabs that marks the borde...

Border between North and South Korea

Sustainability seems to be an all-encompassing concept with no limits to its practical usage. Numerous times we have discussed the problems related to issue that we do not really have a good workable definition of CSR. But in my mind we should at least have some kind of framework that will enable us to differentiate between what is and what is not CSR.

I have compiled a few pointers as to areas that could help to guide professionals in their work and to some extend myself as well.

CSR -> HR

Not all the activities of the HR department is related to CSR even though they do deal on a daily basis with some of the most important organisational stakeholders such as employees, unions, management, etc. However, just because one department has contact with key stakeholders it does not mean that they practice CSR. One border that can be used to make the distinction could be the concept of law (or rules) and voluntarism. The rules that the HR department works under are normally well defined, either through the law, negotiations with the unions or internal procedures that shapes the day-to-day work. In this context CSR would be activities, which are outside the law that the department (and thereby the organisation as a whole) take upon themselves on a voluntary basis. This could be the creation of stakeholder networks outside the organisation itself, development and education of employees that enables them to be qualified for jobs that are not directly linked to the activities of the organisation or invite stakeholder groups which are affected by the activities of employees, unions and management that are under normal circumstances not invited to engage. So while the boundary is hard to define it is clear that not everything that the HR department does can be viewed as CSR some things are just processes, organisational development and tactical decision making.

CSR -> Marketing

For many who do not know much about CSR is the marketing aspect always being put forward as the most prominent reason why companies engage in the activity. However, for most companies the marketing approach is far from what is core to CSR activities. If one look at the costs of social audits, greening the supply chain, effective risk management systems, training and education alone, you can be sure that any marketing professional would tell you that from budget perspective ends does simply not meet. So thinking of CSR as good advertising would simply be too narrow a view. There are elements within CSR that marketing can use such as environmental branding or fair-trade labelling, but the concept of CSR is much more complex than just a way to sell more products. When one defines the border between the two one could look upon CSR as a concept that marketing can use elements of, but which does not constitute the whole of the organisational effort to be sustainable. A good illustration would be that if the organisation only thought of CSR as a way to promote products it would only cater limited number of stakeholders and they would soon realise that there are many more powerful and influential groups out there.

For some organisation it could prove valuable to use an IMC or Integrated Marketing Communication perspective on their CSR activities, in order to create consistency across the may channels that the organisation communicate through. A concept I have written about before.

CSR -> PR

CSR communication can both be convincing and at the same time create mistrust. If an organisation tells the truth and tries to do better in good times it can find that stakeholders will be more loyal and understanding in times of trouble. Some call this the Teflon or Halo effect of crisis communication. That it would seem the some organisation can get out of all kinds of trouble that others would find close to “life threatening”.

Public Relations s normally set within the communication department or as a division of marketing, dealing mainly with one prominent stakeholder namely the Press. Dealing with the media is like a double-edged sword. If you are able to get their attention during the good times you can be sure that they will be there when things go down hill. Some managers think that they can “manage” the press in the sense that they can decide what journalists write. However, nothing could be further away from the truth. Actually the more an organisation tries to manage the press the more they will feel a counter pressure. As organisations have learned to spin or frame stories in a certain light so has journalists learned not to use only one source on their stories. That is not to say that all journalists will investigate all the claims that an organisation makes about itself, but sometimes they do and if they find that they have been lied to it will be very difficult to gain the trust back. Just think of Nike and Sweatshops, Wall-mart and labour rights in the US, Apple and human rights in China or Shell and oilrig dumping in the North Sea. While all these stories are old, some even over 20 years, they still stick to the brand like tare and are testimonials to bad PR and poor CSR.

CSR -> Finance

Something new to the world of CSR is that the concept gains more and more acceptance within the finance department. Traditional have finance found that the concept of CSR was something for others to deal with looking at the concept as soft or were eve hostile towards it in a Friedmanian way. One could say that the boundary between the two was at the door of the department. But as the CSR have matured and to some extend finance departments as well, we now see the two worlds converge. To just name a few areas one could come up with Responsible Investments that increasingly have become a source of financing for companies that wants to be perceived as sustainable. Lists like the FTSE4GOOD or DowJones sustainability index have made some modern companies realise that there can be real financial benefits of working strategically with the concept of sustainability. The whole area of Risk management has been expanded with the introduction of CSR. Until recently risk management was limited to IT systems, good corporate governance and whistle-blowers, but with the introduction of CSR new elements have been added that have the potential of reducing new areas of risk. More and more companies are introducing social auditing together with the due diligence systems when making investments because they realize that social risk can make or break the long-term profitability of an investment. Companies include stakeholder engagement in their efforts to listen and understand less salient voices such as NGO and other organisations that have a stake but no direct dealings with the organisation. Other area of contact can be within financial reporting. Investors not only like to know about profits and margins, etc but also what the company is up to in relation to the environment, labour and human rights, and what it does in relation to corruption all in order to understand the risks that they can expect on their investments.

So at the moment the boundary between finance and CSR is blurred as finance and CSR people are trying to find out where we should draw the line or where we could get the most good out of the relationship.

Closing remark

These are just some of the boundaries of CSR has with organisations and corporations especially. I’m sure as the concept evolves it will expand even further into everyday operations and how corporations conduct their business. I’m also sure that some of these expansions will be fruitful while others will be dead ends and bring nothing new to the organisations ability to operate other than more complexity. I also believe as we get out of the financial crisis we will experience that companies will try to see how they can use a CSR approach to do improve their business and ability to crate a sustainable business.

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One thought on “Boundaries of CSR

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