Kazira

Let's start with the basics. CSR is an acronym for "Corporate Social Responsibility" and it is, these days, the most fashionable and hip business mantra to talk about. Corporate executives speeches to the Wall Street and to their company shareholders are inundated with references to the various aspects and jargon of CSR. A whole host of NGOs (non-governmental organizations), in various shapes and sizes, are popping up every where you can possibly see, to lead, influence, and communicate the impact and benefits of CSR to the company, community, country, and world. You've got legal firms getting into the act, along with design/architecture firms, and even IT firms. Top Fortune 500 companies have already made or are in the process of making adjustments to their business strategy in order to let whoever-cares-to-know that they sincerely care about integrating CSR into their larger plans and global operations.

Historically, there has always been an element of "Corporate Responsibility" where in companies were used to giving back to the community in cash or kind, also known as Corporate Philanthropy. These types of investments were primarily social in nature. Of late, what we are seeing is a sort of green awakening and a heightened concern over climate change. Al Gore's "An Inconvenient Truth" has further helped raise this awareness amongst corporate and private citizens alike, and is making company after company take a serious look at their own impact on the environment. "Doing Well by Doing Good" is starting to make good business sense. Companies are starting to embrace, what is commonly being called, "The Triple Bottom Line" - a bottom line that is made up of Economic/Financial , Social, and Environmental goals and objectives.

Let me outline 3 important aspects of CSR, which will help you grasp this phenomenon better -

1. How are companies enabling CSR?

2. What kind of ROI are companies getting on their CSR investments?

3. What role are the NGOs playing in the making company's take into account Purpose, and not just Performance?

The commitment and investment of the company towards CSR varies based on it's industry vertical. For example, if we look at Pharmaceutical firms like Baxter, Pfizer, Roche, etc., they are demonstrating social responsibility by giving away drugs for free or "at cost" (i.e. no profit). As for the environmental responsibility, they are looking at aspects likes packaging, where recycled products are being used as much as possible, and power, where small investments are being made in green/clean energy sources for generating power to run parts of their manufacturing sites. Further, they are also starting programs that help recycle countless drugs that are sold but are not completely consumed by the patient/consumer. Drugs, in liquid form, that people have been dumping in their sinks or toilets, eventually make it to Mother Earth, and YES, they do have an adverse effect on the soil. Let's take another example, that of the airline industry. Once again, they are showing their commitment to mother nature by trying to use as much of recycled products as possible, findings way of improving fuel efficiency (whether they are on the ground or in the air), and investing in technologies that help them reduce their carbon emissions. Generally speaking, companies are doing some or all of the following things to implement CSR -

1. Giveaway free or highly subsidized products to the under-served and needy

2. Invest in health, food, and education related initiatives in poor regions of the world

3. Invest in clean energy sources and reduce carbon emissions level

4. Increase use of recycled materials and products

5. Work with NGOs and Government Agencies on helping define CSR standards and codes of conduct

Let's now examine what exactly are the companies trying to achieve by doing some/all of the above. Companies are just not going to throw their hard earned money away for nothing. Companies want to invest in areas where they believe they will be able to get the most mileage and returns on their investments. The most important asset a company has is it's reputation and brand; enhancing these are on top of their agenda. There is a direct connection between what you give back to the society and what you get in return. There is so much scrutiny these days from Government and NGO entities alike, that none of the multinational companies can afford to misbehave. There are all kinds of rankings and awards when it comes to non-financial performance of companies and companies are starting to care about them. Moreover, the shareholders and the investors are getting savvy about CSR and they are demanding more from the companies that they are investing in. They want to know what the company is doing to help the victims of Hurricane Katrina, what they are doing to ensure that none of their suppliers are utilizing child labor, and what they are doing to promote diversity at workplace. These are just a few examples of things that are helping shape the corporate strategy and CSR to-do list. Demonstrating maturity and metrics on CSR performance, to the stakeholders, goes a long way in improving a companies Sustainability (another buzzword these days). Along with reputation and brand, companies are also able to see improvement in their risk management capabilities, as well as employee retention rates, employee morale, and most importantly, their financial performance. Finally, they are able to play a meaningful role and help shape public policy on topics of social and environment importance.

Finally, let's look at the role that NGOs are playing within the CSR space. For one, they are relishing being the "watch dogs" of corporate non-financial performance and are keeping a close eye on who is doing what and to what extent. They are organized by issues - some are focussed on the eradication of poverty, others on protecting the wild life, and yet others on preserving the polar ice caps. These are just a few examples of the hundreds of issues that NGOs are championing and influencing. They are funded by public grants, charitable donations, and corporate philanthropy, and also enjoy a number of tax incentives and subsidies. These NGOs are also helping shape public policy, forcing Governments to revisit ineffective laws, establishing CSR benchmarks/standards, and raising the awareness of important issues within the local as well as global communities. They are also serving as useful partners to global companies, who want to collaborate with an NGO, relevant to their line of business, in order to understand where and how to invest.

Like I mentioned earlier, companies have started taking it seriously in order to keep up with the society's fast-changing expectations. They are looking at CSR as something that will also help them differentiate from their competition and give them a competitive advantage. And this means that we all, as members of the corporate work force, also need to start taking this seriously in order to keep up with the change. Some of us may already be part of their company CSR initiatives, others may be called upon in the future, and some may want to think of a career in this new area of specialization. Whatever you choose to do, I hope you were able to get a general but good feel of what CSR is all about and how it is impacting all of us.

Note - Photo Credit