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CSR: A Grand Illusion or Driver of Real Results?

August 14, 2013

I was recently asked by the US Department of State to contribute to their publication eJOURNAL USA about corporate social responsibility and its potential for businesses.

While it wasn’t positioned as a “debate,” the author of the piece with opposite point of view was Dr. Aneel Karnani, a professor of strategy at the University of Michigan Ross School of Business. Nearly three years ago (how on earth did time move that quickly?) I wrote an open letter to Dr. Karnani addressing an op-ed piece he wrote for the Wall Street Journal. So it was great to participate in this discussion again.

If you would like to read the post in its original presentation, it can be found on page 26 of this document (or 22 of the printed version). Likewise, you can also read Dr. Karnani’s entry as well. Here is mine:

Corporate social responsibility — the attention companies pay to the environment, workers’ well-being, and the health of communities where they operate — is a strategy that can affect business competitiveness.

Old-school companies think they have to make a tradeoff between creating value for shareholders and caring for social values. But being indifferent to the impact on the environment and community is not an option for a company, because when egregious, irresponsible business practices reach a tipping point, a brand suffers. Nike Inc. was tarnished by accusations that the company tolerated mistreatment of workers by its overseas suppliers.

Nike is now a leader in human rights and labor standards. But try as they might, some companies can’t shake negative associations with their brand after bad publicity. Some corporations view corporate social responsibility as a marketing ploy to improve their image or brand recognition. Such companies will fail to make real improvements to their business practices or see real results. Consumers say they prefer socially conscious businesses, but their behavior doesn’t always match their words. Of all the factors relating
to purchasing decisions — price and perceived quality being the most influential — social and environmental concerns play a small part, if any.

Some companies do “get it”: They realize that socially responsible policies can improve their market position in the long run. They run their operations in order not only to make money in the next quarter, but also to protect the environment and create value for workers and local communities. By doing so, they become more innovative, reduce costs and improve long-term planning as well as customer and employee engagement. Corporate social responsibility isn’t the solution to the world’s problems. But when companies make it truly a part of their mission, it helps them find new, profitable ways of doing business and builds momentum toward a better world.

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