June 17, 2019
Why CSR Fails and How to Fix It
Corporate Social Responsibility (CSR) has become a universal feature of corporate operations in companies across the globe – and for good reason. Effecting social change is increasingly important, not only for the good of society, but for the good of corporations as well. Unfortunately, CSR initiatives are often met with a lack of respect at board meetings and are effectively rendered second-rate initiatives, even in an age where “social impact” is a major buzzword.
CSR efforts have the potential to protect an organization’s reputation, minimize risk, and maximize profits. Why is it, then, that CSR initiatives, to quote comedian Rodney Dangerfield, “don’t get no respect?” The answer is simple and draws on a widely known business adage: you can only manage what you can measure. Identifying the link between CSR and increased profits and productivity is difficult, and measuring the ‘social impact’ of CSR is even harder.
“The majority of CSR efforts have become, at best, misguided attempts to advance the common good without much in the way of substantive value and, at worst, self-serving and profit-seeking performances.”
For these reasons, corporate responsibility has become more about corporate image than actual substance – more about window-dressing and whitewashing than enacting meaningful change. You do not have to look far to find widespread examples of CSR failures to underscore this point: from the time Volkswagen touted its sustainable practices as it wholly rejected ethical engineering standards, to the days Unilever CEO Paul Polman boasted that his company, then riddled with significant environmental and social issues, represented “an effective force for good.”
“Organizations genuinely interested in fostering social impact or positively impacting their own operations must rethink the way they enact CSR.”
Before conceptualizing CSR for improved outcomes, we must understand why CSR efforts, as they are currently employed, fall flat. The primary reason is because the vast majority of CSR efforts are largely immeasurable. Corporations lack the tools they need to measure social impact, which prevents them from designing successful initiatives. It also reduces accountability in cases where CSR efforts are ineffective or make matters worse. The few tools companies do have to measure performance are fundamentally flawed; many companies depend on their own data reporting, as opposed to objective outside measurements.
Another reason CSR initiatives fail is because the goals of most CSR efforts are far too broad, vague in their objectives, and are widely guided by ideology (“ensure sustainability” or “advance social good”), instead of being focused on actionable – measurable – outcomes (increase food production by XX% or reduce environmental degradation by YY%). And finally, the majority of CSR initiatives are not aligned with public sentiment do not address basic needs, and lack inputs from individuals or communities they are intended to support. This is because they are thought up by C-level executives or CSR professionals in corporate headquarters, who are more often than not out of touch with community needs.
“Social Risk Analysis is the tool companies need to get their Corporate Social Responsibility programs back on track.”
A Social Risk-based approach to CSR solves these problems and provides a much-needed instrument to measure both ‘social impact’ and corporate performance. By using a unique blend of data analytics, social media analysis, and a population-centric methodology, organizations can uncover population-based beliefs and grievances, enabling them to align their CSR initiatives to more adequately address community needs in ways that resonate positively. Moreover, this approach delivers a repeatable, reliable way to gauge the effectiveness of CSR efforts, by measuring a single variable – public sentiment – over time. Employing CSR initiative under this construct enables companies to foster maximum social impact for communities, consumers, and corporations themselves — in turn granting CSR the respect it deserves.
James R. Sisco, Founder and CEO of ENODO Global.