Many will regard the Commission’s endorsement as a sure sign that CSR’s time has past. Its report, written by academics from Insead and other European business schools, certainly contains a fair amount of nonsense, including the “finding” that managers become more socially responsible if they meditate. Doing yoga, according to the report, seems to produce a broadly similar result.
But one Insead graduate is not ready to say goodbye to corporate social responsibility. Speaking at the business school last year, Patrick Cescau, Unilever’s chief executive, laid out his view of how companies’ engagement with society had changed.
Mr Cescau said companies’ commitment should go further than philanthropy, although that still had its place. He also said companies and non-governmental organisations were no longer automatic adversaries. In many cases, they worked together, as Unilever did in 2003 when it joined Oxfam, “an unlikely bedfellow”, to study the impact of the company’s activities on Indonesia.
Most important, Mr Cescau said that corporate responsibility involved understanding that “many of the big social and environmental challenges of our age, once seen as obstacles to progress, have become opportunities for innovation and business development”.
Emerging markets would be the main source of many companies’ growth and helping those societies develop would ensure a stream of new consumers, he said.
Does this leave CSR dead or alive? The name is surely dead: many dropped the “social” some time back, regarding it as either too vague or too limited, leaving just “corporate responsibility”. If we are heading for harder economic times, many companies will feel tempted to drop “corporate responsibility” too and concentrate on shoring up profits.
Profit, in good times and bad, is where any discussion of companies’ responsibilities should start. Without profit, there is no future for shareholders, employees or customers. But engaging with the community in the pursuit of profit has its place: indeed, it is essential.
Companies cannot thrive in collapsing societies. Without political stability, the future of business is grim: look at Kenya or, worse, Zimbabwe. Stability has many components, but prosperity is one of the most important. The more people have to lose, the greater their interest in social peace. For companies, supporting education, entrepreneurs and good nutrition is more than philanthropy: it is money well spent.
Even in the most stable countries, companies need the community’s approval to function. Opinion can turn against them fast: witness European consumers’ distaste for genetically modified food, or the attacks on pharmaceutical companies over the pricing of Aids drugs in Africa.
Neither of these public reactions was entirely fair. The opposition to genetically modified food is scientifically dubious and the South African government has done more damage to Aids sufferers than big pharma ever did.
But life is unfair. Anyone with contacts in NGOs would have seen both these crises coming. Knowing what activists are up to, whether by working with them or getting to know them, is good practice. NGOs do not always understand how companies work, as the European Commission report (which contains plenty of sense, too) makes clear.
Finally, as Mr Cescau says, there are profits to be found in helping solve society’s big problems. Cutting energy consumption and packaging is not just a demonstration to consumers that the company takes climate change seriously. It is also a way to improve profit margins.
Wal-Mart persuaded a toy supplier to reduce its packaging. This resulted in the company using 497 fewer freight containers a year and saving $2.4m. You can call that cost-cutting or you can call it sustainability.
Both Mr Cescau and the Commission report (which is sensible here, too) argue, rightly, that corporate responsibility can no longer be seen as a separate activity. It has to be central to what companies do.
The report found that the most innovative companies were also the most attuned to the world outside, which should not surprise us.
It does not really matter what you call it: being alert to business threats and opportunities, wherever they come from, will not go out of fashion.