Embracing corporate responsibility

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By Shannon Schuyler

Corporate responsibility has taken on many guises and names over the years, with some companies pursuing CR more vigorously and more broadly than others do. In the current recessionary climate, businesses that continue looking for ways to cut costs may be tempted to scale back CR efforts, particularly when those efforts focus on social issues. But in fact, now is when companies can least afford to ignore CR. From an environmental standpoint alone, there are substantial, near-term savings to be had from relatively small investments in energy efficiency, with the considerable add-on benefit of mitigating climate change and resource scarcity down the line. More profoundly, though, the economic crisis has shown that CR cornerstones such as ethics and corporate governance are critical to a company’s survival and success. As is public trust: Nearly 80 percent of Americans trust corporations less today than they did a year ago.1 That fact brings with it a host of potential business consequences, from fewer sales to greater regulation. In an attempt to bolster their public credibility, a growing number of companies have begun seeking points of intersection between their core business objectives and their CR efforts. Done right, that attempt can amount to much more than a defense measure, delivering—as leading companies have found—new market opportunities and revenue growth. 

In order to find where CR goals intersect with core business objectives, a company must first determine what CR means to its particular organization. (See sidebar below.) It is not enough to establish a department that’s broadly devoted to CR, or to assign to the company’s CR activities an umbrella name, such as corporate social responsibility. Far more important than the name a company gives its CR activities or where in the organization those activities officially reside is whether the company approaches CR strategically.

Too often, however, companies pursue CR on multiple parallel tracks, causing those companies to overlook where CR issues and business concerns ought to naturally cross paths. Of course, there are exceptions—certain tracks cross at just about every large company. For instance, human resources (HR) efforts to attract and retain talent generally intersect, as a matter of course, with CR efforts around diversity, community service, and the environment. Increasingly, workers take these and other CR criteria into account when assessing current or prospective employers. More typically, though, CR issues and business concerns don’t meet up. Take, for instance, a company that has a comprehensive strategy for global community outreach: If there is only a vague awareness of that strategy among the people responsible for driving the company’s business development in emerging markets, synergies will be forfeited.

What tends to get in the way of linking CR issues with business concerns is the perception that CR is a thing unto itself. But CR is not a highly delineated concept. The different shapes and forms it takes often bleed into one another, making it difficult to tell where one begins and the other ends. For instance, ethical concerns, community affairs, and environmental issues may blur into one another if a company discovers that runoff from its manufacturing plant has contaminated the crops of local farmers. By extension, it can be hard to discern where a CR concern ends and a business issue begins: If the polluting manufacturer doesn’t take pains to rectify matters, legal or governmental action may force the company to shut down its operations, hurting the company’s bottom line—both directly, in the form of revenue lost in the short term, as well as indirectly, in the form of customer flight resulting from the company’s tarnished reputation and brand.

A company that embeds CR throughout its business is less likely to encounter these problems, since it will make CR considerations central to its standard risk assessment of potential new operations. Rather than simply assess how the environment might impact a new operating plant, a business that approaches CR holistically will also gauge how the plant might affect the environment as well as the surrounding community. Increasingly, companies are finding that taking an ethical approach like this is in their own financial self-interest.

1 The Edelman Trust Barometer for 2009 shows that 62 percent of the public across 20 countries trust corporations less now than they did a year ago. In America, the figure is 77 percent, which is the highest it has been in the 10 years Edelman has tracked trust.