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Posts Tagged ‘Andreau’

Last week I focused most of my The Mythmakers: The end of CSR. Again. on Porter and Kramer’s shared value  or CSV. I did mention Alberto Andreau’s argument that Shifting From CSR To CSV Isn’t The Solution and that the truth and future lies in Corporate Sustainability. I ran out of space and didn’t really give enough attention to Andreau’s argument. What follows are some parts of the original post that landed on the cutting room floor.

As I stated before, Andreau’s idea of Corporate Sustainability is just another way of practicing CSR. But I also want to focus on the three main points he uses against the use of CSR:

1. CSR sends the wrong message: Firstly, breaking down the individual words of the concept is problematic. But there is nothing wrong with expecting business to have a responsibility. The idea that business have some responsibility is as old as business itself. In some cases this is regulated and in some cases not. And remember – before regulations there was nothing. Those companies who had annual financial reports was seen as “responsible” before it became a requirement. And same for those companies who stopped employing slaves. All of these were early CSR practices and then became requirements. It’s not the wrong message – it’s only the wrong message if we think that business have no responsibility towards society. Regulatory or not. Remember, business is in an unwritten social contract with society – do no harm and at a push try to do some good (where CSR comes in). Business can argue that they should be able to do what they want and how they want to but the truth also lies in the reverse – society need not support you or even allow you to operate if they don’t like you. If you argue that business should be able to do what they want then you should also live with the fact that people should protest and target you because that is their same right. We in CSR believe that it is not an either/or question and that business and society need each other and both share a responsibility towards each other to ensure mutual benefits.

The “corporate” part of CSR tells us that this is about business. It is a business approach – one that should add value to the bottom line. “Social” refers to the societal part of the business. Business operates as part of society and have a social obligation – as stated above. And the “responsibility” part refers to the rest of the argument I make above. The combination of the three concepts tells us that this is about business finding opportunities and areas of co-responsibility in their interactions with society – and that they also have a responsibility towards society to add value. And society includes all stakeholders – shareholders, consumers, employees, communities, suppliers etc. All different parts of society. We so easily focus on the “responsibility” part of the definition and easily forget that it is a “corporate” strategy that includes opportunities to add value (money, returns, increased sales, new product innovations, cost savings etc) to and through values. Don’t get stuck on the last word – see all three and how they interact.

2. Information overload: I agree that we have too much information today. But it is this same information that continues to drive new innovation in how we practice CSR, and how we live our lives in a world of information overload. The challenge is rather that CSR is developing so fast as a discipline that we can’t always keep up. Imagine if the concept of business was only started in 1970 and went through all its various changes and implications in 40 years. And really, CSR only took off about 15 years ago. That’s a lot of changes in a short period of time. The information overload is the wheels of CSR spinning at a 1000 miles a minute. It is daunting but it is exciting at the same time. We are in the middle of a new way of doing business – and we are at the center of that. Hang on – this is a wild ride.

3. Absence of global standards: Yes and no. Yes it will help if we have a few more global standards. But there won’t be a global standard for CSR. As I explained earlier – CSR is too complex and you can’t have a single standard for this complexity – only for some of the parts. And, we are finding new and innovative ways to implement CSR each and every day. How do you standardize innovation? Lastly, not even “business” have a single standard out there – only some of its parts and some guidelines at best. We don’t even have a single standard for financial reporting in the world – and that is such as basic business practice. What chance of a global standard for CSR then? Maybe our expectations are just too high on this front.

Of course there are some very specific challenges regarding his proposal to use Corporate Sustainability. Firstly, the addition of “corporate” does not address one of his own problems with the corporate part of CSR – “the term ‘corporate’ serves to instantly exclude every institution outside the realm of corporations.” I don’t think this is much of an issue but Andreau raised it as a concern regarding CSR so the same goes for Corporate Sustainability. Why is it okay for him to use it in Corporate Sustainability but not for us in CSR? Secondly, he argues that we need to widen the meaning of sustainability to ensure it covers everything he wants sustainability to stand for. Why is it acceptable to adapt the meaning of sustainability but somehow not acceptable to do the same with CSR? Actually, I am not asking for a change in the meaning of CSR but only a recognition of its complexity. I agree with his call for simplicity but I don’t think that changing the name will help. The simplicity lies in the earlier definition of CSR I gave and the complexity in the execution. I don’t agree with him that CSR has lost the battle against “philanthropy” and “social action”. Only in the eyes of some who practice it inconsistently or who haven’t kept up with the ever evolving world of CSR practices. Heck, just because some businesses don’t practice business in the right way doesn’t mean we should question business as a whole, does it? There are corrupt business out there; businesses who exploit workers; business who sell snake oil etc. Should we now say that all businesses are bad and should be dropped just because some practice it in the most harmful way? Same goes for CSR – some have practices they call CSR that really isn’t CSR. We should be diligent in raising our concerns with those companies who abuse the term – not abuse the term ourselves. And arguments where we question the concept of CSR only underlines this confusion. Instead of defending CSR against abuse and misunderstanding, we compound the problem by proposing new concepts and terminology and creating even more confusion.

All the additional points made by Andreau is as true of CSR as of Corporate Sustainability: It’s a business approach; it seeks to create long-term value; it embraces opportunity; and it helps manage risk. Thank you Alberto, you described CSR very well – it’s all of the above. Simple but complex at the same time.

To quote Alberto and change it just a little: “This is where the future lies: A unified return to CSR. Not CSR only in terms of philanthropy or compliance only but a sense of CSR related to value, opportunities and risk management.”

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It feels like 1990 all over again. How many times do we go through these arguments that CSR is dead or CSR isn’t a very good description or that CSR is so yesterday. It seems as if we are back at the drawing board again. First we had Aneel Karnani make his Case Against Corporate Social Responsibility in the WSJ last year. Then we had Michael Porter and Mark Kramer argue in the Harvard Business Review that CSR is an old concept and that the new way forward is CSV – Creating Shared Value. And now we have Alberto Andreau arguing that Shifting From CSR To CSV Isn’t The Solution and that the truth and future lies in Corporate Sustainability. Oh boy, here we go again…

I won’t go into detail into Dr Karnani’s argument. It has been dealt with from all angles and most agree that he missed the point a bit. What he perceives to be CSR isn’t CSR but only what some companies claim to be CSR. He was working with the concept of CSR as practiced maybe 20 odd years ago but CSR and CSR practices today have changed dramatically. His definition and understanding of CSR was wrong and his argument therefore based on the wrong assumption. But what about Porter and Kramer, and Andreau? I would argue that they are making the exact same mistake as Dr Karnani. They are using a definition of CSR that is outdated and their understanding of CSR is based on what CSR was 20 years ago – or maybe even closer to 5 or so years ago.

Let me first say that it is an excellent piece. They capture the latest thinking and practices of CSR very well. Unfortunately they then argue that this is CSV and not CSR. It’s not, it’s still CSR. And what they propose isn’t completely new either. Those of us who have been working at the sharp end of CSR have been working on a similar concept and approach for a few years already but we didn’t call it shared value – we coined mutual or co-responsibility. The idea of mutual or co-responsibility is that (leading) companies should focus their CSR on those areas where they share an impact and opportunity with key stakeholders. Starbucks can focus on the cup when they deal with consumers and on sourcing when they work with farmers – helping consumer have a better impact and helping farmers increase yields, get better prices, be more sustainable etc. Levi’s helping consumer limit the impact of their jeans and working with farmers in farming cotton. Best Buy recycling or even buying back older technology. And many more leading companies share this approach to CSR.

Furthermore, we’ve focused more specifically on key stakeholders and not society as whole. There is a reason why – society is too broad a concept for a company to focus on. Break society into the various stakeholder groups and be specific in who you target – key stakeholders such as consumers or suppliers or investors or regulators or your local communities or even distant communities. The more targeted you are the better the chance of success. Of course you should always target more than one stakeholder but try to be as targeted as possible to know exactly where the shared value or mutual responsibility/opportunity might be. CSR works best when it is targeted.

Back to the meaning of CSR…

CSR has changed it’s meaning and how it is used substantially since the 1970s. It started off as all about compliance and pressure from activists for expand on their philanthropic commitments. But today it is as diverse as the concept of business. Business isn’t a singular description anymore. It describes anything from a large multinational company with a diverse set of products to an informal trader working in the streets of a township in Africa. It’s a bit like pornography – we know it when we see it.

Let’s define CSR quickly to provide some clarity. This isn’t a perfect science as we don’t have a single agreed definition. Mine is simple and I don’t claim this to be the final definition of CSR: CSR is the way an organization manages and communicates its impact on society and the environment. Simple. But it is this simplicity that hides the complexity and diversity of how we practice and implement CSR.

Porter and Kramer make the same mistake that Dr Karnani did by not recognizing the diversity within the CSR field. Some practice CSR in the risk management, compliance and/or philanthropy way they explain it and other practice CSR in the shared value way they explain CSV. It’s the nature of the beast – CSR is not a single discipline that covers every single company in the same way. Each company and industry focus on it in a different way. For example, for pharma it makes sense to focus on philanthropy because it is in the nature of the product(s) they offer. It makes sense to donate products to people who can’t afford it – or else they die. As simple as that. It doesn’t mean they don’t focus on other areas but their priority focus will most likely be around philanthropy – and at the core of their business: finding new drugs to help us deal with our health challenges. For companies such as Starbucks it is very different because they focus on consumers and farmers. They help farmers improve their practices and pay a premium price and help consumers improve their impact by offering recycling and encouraging them to use tumblers. Companies and industries are diverse in how they practice CSR. At best it focuses on those areas where their products or service intersects with society – and where the greatest societal needs intersects with business opportunities (or responsibilities).

(Of course we learn from different practices and improve on it but it is always unique for each company – or should be – as it should focus on the specific value the company offers through it’s unique products and/or services and brand and corporate identity.)

Some companies just do not have a shared value with society – or they have a very difficult case to make. For example, tobacco companies can build a solid case of shared value in their sourcing practices (and some do) but they will have a difficult case to make for shared value with the broader society. And the same goes for arms dealers/manufacturers, some military contractors etc.

Shared value is also limited by the timeframe and current knowledge. If we look at societal needs and shared value today then it makes perfect sense to provide a society suffering economically the cheapest fuel and energy. But we know that this will have a negative long-term impact. Shared value shifts and moves with time. What might be a shared value today is another issue to deal with tomorrow.

The idea of renaming CSR to CSV because of the perceived new way is futile. The debate continues each and every day and was at a height 5-7 years ago when some CSR practitioners (like me) argued that CSR has changed from compliance to differentiator and should therefore be renamed because it is now about business opportunities and not compliance-led responsibility. I was wrong back then. I confused the definition of CSR with the practice of CSR. And this is the fundamental mistake of Porter and Kramer. And Karnani and Andreau. They confuse the definition of CSR with the practice of CSR. The practice of CSR is complex and diverse – adapted to the needs of the complexity of business and flexible enough to continue to adapt and change with time and knowledge.

CSV isn’t the new CSR. It is a way of practicing CSR. I would even go so far as to say that it is the ideal way of practicing CSR – finding the shared value with society (or specific stakeholder groups). But it isn’t something different from CSR. It is how some practice CSR. And a damn good way to implement CSR if it makes sense for a company to do so.

As for Andreau – the same argument holds. Corporate Sustainability is just another way of practicing CSR.

Of course a major flaw of Anfreau’s argument is his argument that we need to widen the meaning of sustainability to ensure it covers everything he wants sustainability to stand for. Why is it acceptable to adapt the meaning of sustainability but somehow not acceptable to do the same with CSR? Actually, I am not asking for a change in the meaning of CSR but only a recognition of its complexity. I agree with his call for simplicity but I don’t think that changing the name will help. The simplicity lies in the earlier definition of CSR I gave and the complexity in the execution.

All the points made by Andreau is as true of CSR as of Corporate Sustainability: It’s a business approach; it seeks to create long-term value; it embraces opportunity; and it helps manage risk. Thank you Alberto, you described CSR very well – it’s all of the above. Simple but complex at the same time.

To quote Alberto and change it just a little: “This is where the future lies: A unified return to CSR. Not CSR only in terms of philanthropy or compliance only but a sense of CSR related to value, opportunities and risk management.”

In conclusion, what is described as CSV and Corporate Sustainability are not new but captures some of the latest developments of how we practice CSR. And they do an excellent job of expanding the thinking of how we (should) practice CSR. But there is a limit to their contribution. Let’s not get distracted by shiny objects and new names – let’s stop this arguing about what we call it as it doesn’t help us do the work we are doing and distract us with discussions about terminology. The value of Porter and Kramer, and Andreau, gets lost in the discussion of terminology. We argue about what we should call it instead of expanding the discipline and practice of CSR. The value of Porter and Kramer lies not in calling it CSV but in strengthening the practice of CSR – shared value, co-responsibility, mutual responsibility etc. I think their description of mutual responsibility is a much better description of my own – shared value describes it better than my idea of mutual or co-responsibility.

By focusing on what we call it we lose the value of Porter and Kramer’s work when they describe the roots of shared value – taking on Friedman, showing how shared value is a traditional part of the best companies, show how reconceiving products and markets can bring new value to business and society, highlight local cluster development as a driver to create shared value, and so much more. None of this is new – Starbucks have been sourcing this way for over 10 years; cluster development is a natural phenomenon and the modern version was started by a history prof and a garage owner in Chihuahua, Mexico; most companies started with a shared value offer – from Walmart bringing cheap food to the poorest Americans as close to their homes as possible to the mom-and-pop shops offering locally produced good. The beauty does not lie in the fact that they create the concept of CSV but rather in their ability bring the latest thinking and practices of CSR into one single place – and drive us further forward in the implementation and practice of CSR. It is a powerful piece and one that should be used to defend CSR and show how CSR has grown instead of using it to divide us even more because of a debate on terminology. Let’s stop arguing what we call it and focus on what we practice and do each and every single day. Let’s advance the discipline of CSR instead of creating more divisions through renaming it. Let’s focus on improving the impact of business on society and identify mutually beneficial opportunities instead of looking at the impact of what we call it. Let’s just do it instead of calling it…

CSR is dead! Long live CSR!

(Disclosure: As promised, I think it is only ethical and right for me to mention when I have worked or work with a company I mention in my post. It’s called transparency. All of the companies mentioned above – Starbucks, Levi’s and Best Buy are clients.)

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