Tag Archives: #CSR

Concepts, CSR, Ethics, Featured, Models, News, Philanthropy

Is CSR Effectively Altruistic?

By Lot Elshuis.

CSR is the part of a company that focusses on doing good. Interestingly enough, business is all about impact and effectiveness when it comes to the core of the business, but when strategies of doing good are developed and implemented there is often more concern for what sounds good than for the effectiveness and impact of their actions on recipients. Why is the rigor applied to core business activities often not applied to CSR-strategies as well?

Effective Altruism: Maximize impact, not feel-good moments
Effective Altruism takes exactly this approach. Kick-started by philosopher Peter Singer, Effective Altruism is a community that wants to change how ‘doing-good’ is often approached. First of all, Effective Altruism emphasizes that most people in developed countries, and especially those belonging to the richest 10% of the world population, have an outstanding opportunity to do good. We have won the lottery! Therefore we have the beautiful chance to add value to the lives of others.

Second of all, if we indeed want to take the opportunity to do good, we can do the most good by focusing on maximizing positive impact through applying scientific evidence and reason, instead of only looking at what sounds and feels good. Without thinking carefully about how exactly to do good, there is a risk of wasting important resources on things that do not work. Even worse is having the idea of doing good, while actually causing harm.

The Case of Play-Pumps International
Let me give an often-used example. Many developing-world communities are provided with water through hand-pumps. The social enterprise Play-Pumps International had the idea to replace these hand-pumps by merry-go-rounds, which would pump up water while children played on them. It seemed to be the ideal win-win situation. The enterprise received a grant from the US Government, a World Bank Development Marketplace award, and (it can’t get much better) a visit and sponsorship from rapper Jay-Z. However, sadly enough, the Play-Pumps didn’t have the positive impact that everyone assumed it had. One of the main problems was that the pumps needed constant force to obtain the water, which, obviously, made the kids tired. This often compelled the women of the communities to struggle to push the pumps. Moreover, the Play-Pumps were several times the cost of a hand-pump, which were able to pump more water an hour as well. (see Doing Good Better by William MacAskill for a more elaborate description of the case)

Rule of Thumb: Importance, Neglectedness, Tractability
Although Effective Altruism is focused on the individual who is willing to do good, we could apply the same to corporations who pursue CSR or social entrepreneurial strategies. Especially because effective altruists often focus on the cost-effectiveness of a cause or approach. This line of thought shouldn’t be unworldly to corporations, since cost-effective rationalizations are applied on a regular basis. An often-used rule of thumb by Effective Altruism for evaluating causes or approaches is assessing the following criteria:

  • Importance: What is the scale of the problem; how many people are affected and how deeply?
  • Neglectedness: Is there still enough opportunity to do good, or are a lot of other people already working on improvement in this field?
  • Tractability: Is there something practical you can do, with the possibility of succeeding?

By applying these criteria and looking for evidence through research, companies are likely to have a more profound impact on the area in which they want to do good.

Responsibility – but where?
As the name says, CSR is about responsibilities. Therefore, we might wonder whether companies who apply CSR actually have the responsibility to do the most good they can (with the same amount of time and money). Can we argue for saving lives in the poorest countries instead of improving the labor conditions of the workers in one’s own supply chain? While the former has a bigger impact, the latter might, to a greater extend, be in line with the more obvious responsibilities of the particular company. This is an interesting discussion, but unfortunately outside the scope of this post to deal with.

However, a lot of multinational organizations are already involved in causes that do not directly relate to their own supply chain. Google is for example awarding $1 billion in grants and contributes 1 million employee volunteer hours ‘to create more opportunity for everyone’. More specifically, H&M announced in a press release in September that they are donating $200,000 to Save the Children for “South Asia’s worst flooding in years”. From an effective altruist perspective, it would be rational to figure out, what the scale of this cause is at the moment, if there aren’t already a lot of other donors involved in this particular disaster relief in South Asia, and whether Save the Children can actually do something successfully about the situation of those affected by the floods. Accordingly, this could be compared to the measured impact of other causes to conclude where H&M’s, or Google’s, resources would be most valuable.

Impact before Marketing!
We all know that CSR is more often than not linked to marketing strategies. There is a high chance that H&M chose to donate to South Asia’s flooding because more potential consumers will be affected since they probably have heard about the flooding recently and were emotionally moved. However, this doesn’t have to pose a problem, because Effective Altruism is not per se about ‘selflessness’, although often used as definition for altruism. It is totally fine to feel good about doing good. In fact, it would be wonderful if everyone felt better by doing good, because then it is likely that more people will actually do good. Therefore, it would be all the more impactful if organizations started to market the impact of their causes, rather than doing and marketing what feels good. With that, consumers could support companies that do good effectively, instead of companies that scream the loudest without having a real positive impact on important cause areas.

Lot Elshuis is a MSc Candidate in Business Administration and Philosophy at Copenhagen Business School. With a background in philosophy, her research interest is focused on discussions about the role and responsibility of business in society and the ethical dilemmas that these discussions entails. You can contact her on LinkedIn.

Pic by Diego PH, unsplash.

 

Accountability, Concepts, CSR, Environment, Featured, Issues, Models, News, Reporting, Stakeholders, Sustainability, Technology

Adventures in Materiality. Notes from the first CBS Sustainability Seminar

By Steen Vallentin.

  • On October 31, 2017 the new CSB Sustainability seminar series was launched
  • With a room full of practitioners and academics, the topic “Materiality and Quantification” in CSR and sustainability reporting was discussed
  • Diverse input for discussions were given by presentations by CBS, DTU and a practitioner in corporate sustainability reporting

Approximate reading time: 4-5 minutes

All we need is Materiality?
Materiality is arguably gaining significance in corporate approaches to CSR and sustainability. While strong narratives remain important, they do not suffice in a world filled with increasing amounts of data calling for transparency and factual assessment of corporate accomplishments, progress or decline. There can, however, be a price to pay for an increasing reliance on metrics and measurements. What happens to ethical and moral concerns, to fundamental values and the sense of overall purpose if CSR/sustainability is reduced to a technical matter of taking numbers and ticking boxes? This was the topic of the first in a new series of CBS Sustainability Seminars. Here is some background on the topic and the seminar series, plus some notes on the presentations of the day.

The rise of materiality in CSR and sustainability
Sustainability reporting and efforts to assess the materiality of corporate responsibilities toward the people and the planet are undergoing interesting transformations these years. Not only is sustainability reporting becoming a more and more widespread practice internationally, due to mandatory disclosure requirements and the institutionalization of standardized reporting formats such as GRI and integrated reporting. We are also, among other developments, witnessing corporate efforts to integrate adherence to the UN Sustainable Development Goals into non-financial reporting formats, including materiality assessment, and companies committed to set and communicate science based emission reduction targets (see Science Based Targets).

The new cbsCSR sustainability seminar series: research-based & multidisciplinary
Hence, “Materiality and Quantification” was an obvious choice as topic for the first event in the new series of CBS Sustainability seminars that will be taking place from the Fall of 2017 and onwards. The inaugural seminar took place on October 31 and featured three speakers: Professor Andreas Rasche from CBS, Frances Iris Lu (CBS and Maersk) and associate professor Niki Bey from the Technical University of Denmark (DTU).

The purpose of the seminar series is to forge closer ties between researchers at CBS and professionals from companies and organizations – to enable collaboration and easier access to each other’s knowledge and resources on an ongoing basis. And to build stronger relations among researchers at CBS. The USP of the network is that it is research-based and multi-disciplinary. One aim is to help bridge divides between knowledge silos and facilitate dialogue between different knowledge disciplines. Another aim is to broaden the scope of how we think and speak about sustainability, and to explore how far we can take this concept – in different  indicated by its three pillars: environmental, economic, social. To this end, the seminar series will present many speakers from CBS and other research environments that would not ordinarily see their research as part of a sustainability agenda.

Materiality assessments are no moral assessments
In the first seminar, however, we were on familiar ground with regard to sustainability. Based on a forthcoming research paper (using data from the Netherlands and co-authored with Koen van Bommel and André Spicer), Andreas Rasche showed how sustainability reporting has gradually developed into being a more and more standardized and technical practice. A key concept in this research is commensuration, which refers to the process of transforming different qualities into a common metric. It reduces and simplifies ‘thick’ information into metrics that are comparable to other metrics. Over time, commensuration stimulates a standardization of the meaning of sustainability. When something is turned into a metric and standardized, it often leads to a crowding out of moral questions and concerns. Subsequently, sustainability reporting can be a driver of ‘amoralization’ processes by which questions of morality, values and purpose are replaced by technical performance measures. On the one hand, this technical and instrumental turn can be part of the explanation for why sustainability reporting has become so popular (because it sidelines ambivalence and difficult moral quandaries). This need not be an entirely negative outcome, as pointed out by a participant, because it can be an indicator of increasing business integration of sustainability. We do, however, on the other hand, need to be aware of the possible downsides of this proposed ‘technicalization of sustainability’.

Moving beyond ethical idealism – the price to pay for conquering the mainstream?
While this finding is based on a longitudinal empirical study, I have made a similar point in a conceptual paper reflecting on the effects of instrumentalization in the realm of CSR more broadly. To quote myself (at length):

“As a result [of instrumentalization], it is now all too easy to speak of CSR without making any mention of ‘ethics’ or bringing up moral issues or dilemmas; a development that can lead to a strangely depersonalized understanding of responsibility and which raises questions about the relevance of ethics for CSR altogether. Whether this is a problem or not is of course debatable. On the one hand, it can be considered as a sign of progress in the sense that the CSR debate (and CSR as corporate practice) has decidedly moved beyond ethical idealism and the subjectivity/arbitrariness that may be associated with individual values and choices. CSR has developed into a socially embedded, highly institutionalized and material phenomenon. On the other, it is worth pondering what, if anything, has been lost on the path to (apparent) victory in the public realm of ideas. Is the displacement of ‘ethics’ a sign that the responsibility discourse has lost its normative bearings and that this has been the price to pay for conquering the mainstream?”

A practitioner’s perspective on values & materiality: We can have it all – (can we?)
Frances Iris Lu gave a presentation of the evolution of materiality and materiality assessments in recent years, drawing on her experience from KPMG and Mærsk. She showed how materiality assessments can often, in practice, be rather loose exercises bereft of analytical rigor, but also how it is possible to add more rigor to the process. One key feature (and possible limitation) of a conventional materiality assessment is that it tends to focus strongly on the risk as opposed to the opportunity side of responsibility, making it difficult to reconcile with policies aiming to create (shared) value.

To bridge this gap, and to make room for the company values in the account of materiality, Mærsk has created a new ‘materiality beyond the matrix’ model. Frances presented this new and more comprehensive and multi-faceted model which accounts for materiality under the three headings: Risk, Shared Value, and Responsibility. Challenging the amoralization narrative presented by Andreas, Frances argued that we are seeing a sort of pendulum swing taking place in sustainability right now where values and purpose are getting more attention – alongside the continued focus on metrics.

Materiality and Quantification in practice: The Life Cycle Assessment Lens
Finally, Niki Bey brought the quantification of sustainability through Life Cycle Assessments (LCA) into the discussion. LCA is used as a general framework to avoid the problem of cost shifting across impact categories (e.g. using less plastic might ultimately increase food waste). Although the LCA is never completely objective, we need to try to approach matters of sustainability systematically and to focus on available facts – how far can we get in terms of what we know and what we can measure, instead of focusing on subjective criteria.

A participant mentioned enthusiastically that the LCA is the most important decision-tool she has ever worked with because it makes people able to move up and down in perspective and allow them to see the bigger picture in regard to sustainability and corporate responsibilities. While LCA is usually applied as a relative measure that can be used to compare and choose between different courses of action, it can also be applied in an absolute fashion, as with the Planetary Boundaries.

Overall, the seminar brought out as many questions as it did answers. We look forward to continuing this and other adventurous discussions in future CBS Sustainability seminars.

Steen Vallentin is Director of the CBS Centre for Corporate Social Responsibility (cbsCSR) and Associate Professor in the Department of Management, Society and Communication at Copenhagen Business School.

Pic by Miguel A. Amutio, edited by BOS.

Concepts, CSR, Featured, Models, News, Philanthropy, Sustainability

CSR is Dead. Long Live CSR

By Andreas Rasche, Mette Morsing, and Jeremy Moon.

We – Andreas Rasche, Mette Morsing, and Jeremy Moon – just edited an international textbook entitled Corporate Social Responsibility: Strategy, Communication, Governance (Cambridge University Press). When talking to people about the book, one common response was: “Why didn’t you just call it Corporate Sustainability? After all, this term is used by everybody these days…” In 2014, Peter Bakker, the President of the World Business Council for Sustainable Development, even declared: “CSR is dead. It’s over.” And Michael Porter and Mark Kramer made a very similar claim when pitching their “shared value” concept a couple of years earlier.

Mr Bakker’s main point was that CSR is mostly about philanthropy and that it is not properly embedded into business models yet. It is hard to disagree with this statement, but nevertheless neither Mr Bakker nor Mr Kramer and Professor Porter got to one point:

The core of the problem

First, if you do not have an antique understanding of CSR (as preached in the late 70s), you will recognize that it actually is about integrating firms’ social and environmental responsibilities in their value and supply chain activities as well as their business models. This is precisely what the entire debate on “strategic CSR” has been aiming at. Those companies who understand CSR in a contemporary way know that they have to integrate their responsibilities vis-à-vis society into everything they do; and this is not necessarily because they are environmentalists or social protagonists but because this is what society expects from them and this is what provides them with their license to operate.

However, simply changing labels from “CSR” to “Corporate Sustainability” won’t make firms more aware that their business models need to be aligned with their responsibilities vis-à-vis society. While Corporate Sustainability may enable a smoother dialogue between management scholars and economists and while it may also help to engage in dialogue with peers from the natural and technical sciences, it also blurs the importance of firms’ ethical responsibilities. In fact, one could argue that while the Corporate Sustainability language has increasingly helped to engage the investor community into what they label Environmental, Social and Governance (ESG) issues, it has also sidelined important ethical dilemmas that were once at the core of the debate.

Second, we should not too quickly disparage corporate philanthropy as an outdated concept. Currently, philanthropic contributions are a key driver of many partnerships in support of broader development goals such as the UN’s Sustainability Development Goals (SDGs). Also, philanthropic contributions are often quite “strategic” – many firms directly benefit from such contributions, such as when charity investments in education secure a skilled future workforce. Also, many SMEs make strong philanthropic contributions to the local communities around them – for them CSR is a matter of personal values (often driven by the owner-manager).  Yet, this can bring benefits of employee motivation  (as, somewhat paradoxically, even Milton Friedman noted), social marketing and customer loyalty.

The bottom line: rationales, not labels

The core of the problem lies not so much in labels. It more profoundly lies in the challenges that systemic injustice, corruption, human rights and climate change pose for society and for business, and the resources and strategies that businesses bring to address them. Therefore, we should not focus too much on labels – labels come and labels go. But we should rather focus on ‘rationales’.

Actually, Chapter 2 of our book makes exactly this point. Corporations are often quickly relabelling and repackaging their engagement with responsible and sustainable business. What was formerly described as ethics was translated into CSR and now turns into Corporate Sustainability. In the future it may be given even another name. This is not to say that corporate practices are not changing. Actually, there is a lot of innovation around corporate sustainability and many firms have learned a great deal about which material issues need to be addressed. It is to say, however, that we should not simply throw away the “old” and believe that the “new” will be the Holy Grail.

In this sense, editing a textbook on “Corporate Social Responsibility” is a very timely undertaking. We cannot ignore the big societal challenges that are ahead of us, and by educating the business wo(men) of tomorrow we have to acknowledge that firms’ responsibilities have to be deliberately managed, regardless of whether we call this “CSR”, “corporate sustainability”, “shared value” or something else. We hope that our book will convey exactly this message.

CSR is a continuous journey

The point for us is this: Responsible and sustainable business has to be alive in our minds; it has to shape what we do, how we do it, and why do it. We have to look beyond and behind the different labels we ascribe to responsible business behavior. Truly engaging with a book is but one of the many important ways to achieve just that… CSR is a journey that has just begun and that continues to unfold on a daily basis.

Long live CSR!

Info: The book “Corporate Social Responsibility: Strategy, Communication, Governance” edited by Andreas Rasche, Mette Morsing, and Jeremy Moon is available from 17 March 2017.

Andreas, Mette and Jeremy are editors-in-chief of the BOS Blog and Professors at Copenhagen Business School’s World Class Research Environment Governing Responsible Business.

Poster by Cambridge University Press.