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This post was originally posted on Vault’s CSR Blog - a great resources and a huge thank you to Aman Singh! It was part of a discussion between Alberto Andreu (Chief Reputation & Sustainability Officer at Telefónica)  and I on CSR and Sustainability. He countered with a great post. Great guy and great thinker. It was an honor to have such a constructive discussion with someone like him.

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I am afraid Alberto and I violently agree with each other on the most important aspects of CSR: Where it comes from and where we are today. Where we might not agree as much is whether this is still CSR.

In my view, CSR is not a revolutionary process but one that continues to go through many changes—an evolutionary process. The graphic below is my first attempt to describe this evolutionary process.

Phase 1: Philanthropy

In its initial phase back in the 1970s, CSR was all about philanthropy and what business should do with some of its profits. Small shifts in thinking pushed this early form of CSR forward. Companies became more strategic with philanthropic initiatives and tended to focus on projects in their local communities. This eventually grew into Corporate Social Investment that brought a business sense to philanthropy – focusing on results and outcomes.

 

Phase 2: Globalization Forces Standards

Slowly, globalization started shaping our world more and the impact of business in this globalized world became an increasing focus for activists. From a narrow focus on philanthropy we moved into an era of citizenship. Companies became business players in a globalized world, or, as it became known, Corporate Citizenship.

They started developing standards to manage their risks. This led to the need for global standards – from extractive companies and human rights to how we report on CSR today.

Phase 3: Citizenship-led Cause Marketing

When the term cause marketing was initially floated, CSR became something business could benefit from for the first time. It was a huge shift in how we perceived CSR,– not just risk management. This benefit-based approach brought operations back on the table leading to the development of CSR as a business strategy.

Now, CSR was suddenly not about cutting costs but about increasing profits.

Phase 4: CSR & Sustainability Tied with Future Business Growth

The latest evolution of CSR, or sustainability, has taken this concept of business benefit even further and started looking into the future of business and society—the heart of CSR. Sustainability today looks at finding mutually-beneficial solutions to the challenges we face as society as well as future challenges.

But CSR, even today, is  still about how business can operate profitably within this role as a responsible citizen toward society.

From Reactionary to Risk Management

We have moved from a reactionary model of philanthropy to a crisis-led model in the early stages of globalization to a risk-based model in citizenship to a mutually-beneficial business model in sustainability.

We might have seen our understanding of CSR deepen throughout this evolution but the definition of CSR hasn’t changed much over time—CSR is the way a company manages and communicates its impact on society and the environment.

Many of the individual parts of this evolution (Philanthropy, standards, etc.) remain with us today but these are not the only parts of CSR anymore. We’ve adapted and moved on – keeping the good stuff, improving on them and adding to it.

The world of CSR is very, very different today. But it is still CSR.

An Argument for Terminology: Corporate Social Responsibility Fits Best

While this might be somewhat semantic in nature, it is still an important part of the debate: We should look at the description of CSR itself. Why do we use these very specific three words to describe what we do?

I would argue that the concept is actually a very good description of what we do today. Here’s why:

Corporate implies that this is about business.

  • It not only describes that we are busy with a discipline involving business but goes deeper.
  • It is about profits – how we make them and how we can make more of them today and tomorrow.
  • It is not about charity.
  • It is about building a sustainable business model that will continue to deliver business results for stakeholders – especially shareholders.

Social tells us this is about society.

It is about the impact business has on society and how we can manage this impact to ensure both business and societal benefit.

Even the environmental part of CSR is about society – how we can minimize environmental impact to benefit society in the end of the day.

The new developments in CSR – sustainability – further continue to prove that CSR is about a mutually beneficial relationship between product and service development, and societal value chains.

Responsibility reveals that business does carry a responsibility in this world – to do business in a way that benefits both business and society. Further, this responsibility gives business the opportunity to create new solutions to the needs of society. I would even argue that it is their responsibility to develop these new solutions and benefit by capturing new avenues of sustainable profit.

All three concepts—Corporate, Social and Responsibility—tell us exactly what we do today. CSR is also the perfect reminder of the relationship between business and society, and the responsibility they have towards each other. None of the other concepts proposed today actually tell us what we are doing and what we should be doing.

I say, long live CSR, and may it continue to evolve and change our business world for the better.

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The capitalist have left the building. We just can’t find them anymore. Everyone seems to be a social entrepreneur (when they aren’t green investors). Do-gooders with with spreadsheets as they are called. People who take a social need and turn it into a business.

And we have some classic examples to look up to. Aussie Nic Frances whose group, Easy Being Green, plans to cut carbon emissions in Australian households over the next 10 years. The business? He hands out free low-energy light bulbs and low-flow shower heads in return for the rights to trade the carbon emissions the equipment will save. Nic sells the carbon credits to industry, and is now aims to take his business global.

Isaac Durojaiye runs a franchise in Africa. In a continent where children die from diarrhea from bad sanitation, Isaac supplies mobile toilets to slum areas and young people run the franchise in the slum. They keep 60 percent and the rest goes to Isaac. And Africa is a large continent with a huge market to expand the franchise.

Bottom line (no pun)? Their business address a social need AND they make money from the enterprise. Of course, they put more money back into the business to buy more light bulbs or more toilets – a typical business expansion strategy of investing back into your business for expansion. And I am sure they take enough to ensure they don’t suffer too much.

But there are other classic examples of social entrepreneurs. Another classic example of a business idea that started with a focus on a social need and expanded this globally? Wal-Mart. Sam Walton started with a very basic idea of offering the community what they needed and wanted straight after the Second World War – stores that offer goods at the lowest possible prices and that stayed open later during key holidays. He passed on the saving he made from buying from lowest priced suppliers to his customers. A basic social need of the time developed into a business model social entrepreneurs have duplicated ever since – give people what the need at a price they can afford. If it works, give it to more people.

At the heart of almost every large business lies the social entrepreneur. Timberland started from the idea of giving working people a set of work boots they can afford and that will protect them from the elements they have to face in their work. McDonald’s from giving people, who work long hours and earn low wages, quick and cheap food they can have ‘on the run’. Pfizer from the simple need to make medicine taste better. The Home Depot from the need to give people the tools and skills to do the DIY job themselves. These companies were all started by social entrepreneurs.

The challenge for most companies is to remember why they started in the first place and ask themselves – are we still serving a social need? And for our future growth – what social need can we serve to continue to grow as a company, still be socially relevant and needed by society. And no one said you only had to serve one single social need through your business. There is no reason why you can’t give people goods at an affordable price, lower your environmental impact, and provide your workers with health care and pension. Ask Tesco’s, the Body Shop, Ben & Jerry’s or Starbucks – they continue to do that. (By the way, you don’t have to like any of these companies. None of them are perfect. Not even Nick and Isaac will go through life without making a mistake).

Now, if only I can find a social need to package and sell it like Nic and Isaac. Oh, I don’t know – maybe a pill to end poverty, a drink that will end hunger, a shoe that provides shelter, a lipstick for good health, or crops that will end abuse.

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