What is CSR? Free download of introduction to CSR now available

[This post has now been updated with the new edition of our textbook and a new free download. Go to the post "Corporate social responsibility in a global context - a new free download"]

We've just posted online our introduction to CSR from our 2008 text co-written with Laura Spence, Corporate Social Responsibility: Readings and Cases in a Global Context. It's available for free download here at  the Social Science Research Network, albeit only in the pre-typeset version.  In the paper we examine the nature and definition of CSR, and its emergence in different national and organizational contexts. It should be a good basic CSR 101 for anyone trying to get their head's around the subject.

Of course, the question of what corporate social responsibility (CSR) is should be pretty straighforward. It is obvious that CSR is about the stuff that companies do to improve society, right? Or at least what they do to make it less worse. Or perhaps its what they tell us they're doing to make things better, but in reality they're not really doing much of because its expensive, uncompetitive, and difficult. Or maybe its what they should be doing, or doing more of, if only they were a little more, well.... responsible.

So 'what is CSR' is a deceptively difficult question to answer. It almost immediately brings up questions of whether firms have particular types of responsibilities, what those repsonsibilities are, how much firms should be doing, for who, and why. In fact it is easier to come up with a list of questions rather than a simple short definition that pleases everyone.

Still, that's no excuse for ducking the question. Our approach in the CSR introduction paper is not to get too caught up in definitions, but to explore what unites the different definitions that are out there and use that to identify the core characteristics of CSR. In all, we identify six of these components, as shown in the figure below. To find out more, just take a read of the paper....

 
This figure is not actually in the chapter, but feel free to use and reproduce under a non-commercial creative commons licence, giving appropriate citation to the original source of the idea.

A legal victory for B Corporations

A few weeks ago we discussed the B Corporation phenomenon which certifies firms that formally amend their corporate governing documents to incorporate stakeholder interests beyond those of shareholders.This week brings news of the first legal victory for B Corps with the signing into the Maryland legislation provisions for the legal creation of such "Benefit Corporations". According to the press release from B Lab, the outfit behind the B Corporation initiaitive: "Benefit Corporations must by law create a material positive impact on society; consider how decisions affect employees, community and the environment; and publicly report their social and environmental performance using established third-party standards. The legislation, sponsored by Senators Jamie Raskin and Brian Frosh and Delegate Brian Feldman, passed the Maryland Senate with a vote of 44 – 0 and the Assembly 135 - 5."

The press release also states that "Maryland is the first state to pass Benefit Corporation legislation, but others are quickly following Maryland’s lead.  Vermont Bill S.263, co-sponsored by Senators Hinda Miller and Peter Shumlin, has already passed the Senate and will be considered by the Vermont Assembly over the next 30 days.  Other states considering the legislation include Colorado, New York, North Carolina, Oregon, Pennsylvania, and Washington"

An interesting development for sure, though time will tell whether it has much material impact. Still, any initiative that seeks to get deep into the DNA of companies like this certainly qualifies as an exciting and ambitious experiment aimed at genuinely doing something different. The press release from B Lab puts it this way:

"The new law addresses a long time concern among entrepreneurs who need to raise growth capital but fear losing control of the social or environmental mission of their business. These entrepreneurs and other shareholders of Benefit Corporations now have additional rights to hold directors accountable for failure to create a material positive impact on society or to consider the impact of decisions on employees, community, and the environment. From a company’s point of view, the new law empowers directors of Benefit Corporations to consider employees, community and the environment in addition to shareholder value when they make operating and liquidity decisions. And, it offers them legal protection for those considerations."

Critics will for sure be concerned that this represents a weakening of the economic incentive at the heart of capitalism  ... and one that may compromise economic value creation. But surely the time is ripe for efforts like this to balance value creation for all in a systematic way. So congrats to B Lab for getting this going.  The road ahead will be long, but this could be an important bridge that has just been crossed.

Bad habits die hard

It is amazing with how little social responsibility some companies manage to keep up a reasonably good image. BP is one such example. A major contributor to climate change, with recent scandals and disasters in Texas and Alaska – it nevertheless still maintains this cosy, green, ‘we’ve-made-a-start’ image.

There are also examples for the opposite. Nestlé is a case in point. Yes, they had some major blunders in the past about the marketing of their infant formula. But by and large, the company is nowhere up there with the oil, tobacco or car industries; no large scale environmental disasters, no deliberate misinformation of the public and no negligent acquiescence in killing their customers. Nestlé’s products are by and large OK; yes, some of them, such as KitKat might not be the healthiest, but by and large Nestlé is a food company who even amongst its peers (such as McDonalds, Cadburys or other food companies) does not look like the worst villain.

Despite all that, Nestlé has ‘skillfully’ managed to be one of the most vigorously criticized companies; in fact they hold the record of the most boycotted one. The latest blunder of the Swiss multi reads a bit like a piece out of a cheap spy novel: allegedly, according to Swiss television, Nestlé has hired the private security firm Securitas to spy on the Lausanne chapter (next door to Nestlé’s HQ in Vevey) of the NGO Attac. Main point of interest for Nestlé allegedly was a book the group was writing about the company.

It is amazing how illiterate in an ethical sense a company with this legacy can be. It is even more bizarre considering that under its current CEO Brabeck-Letmathe Nestlé has made considerable inroads into systematically addressing CSR. Yet, the deeper DNA of the corporate culture seems more stubborn than – maybe ephemeral – CSR fashions dictated from the top floors. It obviously crossed nobody’s mind at Nestlé, that some companies have actually started to talk to their ‘adversaries’ – stakeholder dialogue we call this.

It might be interesting to speculate about the reasons why Nestlé is so clumsy in addressing its stakeholders. We won’t get into that here. Sure to say though, Nestlé still has more of a ‘Feindbild’, a stereotype of an enemy, when they think about their stakeholders…