Why brands are moving beyond CSR
The United Nations Industrial Development Organization defines Corporate Social Responsibility (CSR) as:
“… a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (the triple bottom line), while at the same time addressing the expectations of shareholders and stakeholders.”
CSR, its monitoring and reporting, is a fairly recent trend that has expanded over the last twenty years. Some chemical and tobacco companies were producing environmental reports in the late 1980’s as an attempt to manage significant reputational issues but it really came to prominence in the 1990s when I first came across CSR via annual report design and production.
By the end of the 90’s CSR had become institutionalised with standards like ISO 14001 and SA 8000, guidelines like the Global Reporting Initiative and corporate governance codes like Cadbury and King. The 21st century has been mostly more of the same, with an increasing number of published CSR guidelines, codes and standards.
Today the concept had become almost universally sanctioned by all major constituents from governments and corporations, to non-governmental organisations and individual consumers as the process for sound corporate governance and reporting, and as a general sign of good brand behaviour.
So why is business now looking to move beyond CSR?
For Lord Browne, the former CEO of BP and one of the original advocates of CSR, recently interviewed by Marketing Week, CSR has become a failed strategy that ‘all too often is separated from the core function of the business.’
Browne argues that ‘[CSR] started out as an attempt to improve businesses’ engagement with society, but it has become a sticking plaster over a company’s issues and an afterthought for the board on a Friday afternoon.’
CSR has undoubtedly had many positive impacts, for communities and the environment. Yet its success or failure is now being judged by an increasingly informed and demanding general public and in the context of the total impact that the process has had on the way businesses behave toward society and the planet. And on this measure, as Hugh Milward, the Corporate Affairs Director at Microsoft, believes ‘CSR has lost its credibility…’
Few if any businesses would admit to acting against the interests of society but for too long many have considered the practice of CSR as sufficient – and as long as, at some point there were tangible examples of corporate philanthropy that could be reported on, then the societal case for their good corporate governance could be made.
But the world is quite different today. The age of the responsible business is clearly upon us, if not so fully in terms of execution, then most certainly in terms of consumer expectation. Grand statements to ‘make a difference’, ‘create a better world, and ‘go further’ have become a mismatch with the irregular and infrequent, acts of generosity and support we associate with many CSR initiatives.
Our relationship with the corporate and natural world is changing, and consequently our view, as consumers, as ‘the public’ as human beings, of the role of business in our world is also changing.
One of the major issues with traditional CSR is that business itself defined what was relevant and where they it focus its actions. Today, we are seeing more and more how business is being questioned and challenged to be better and do so in partnership with others in order for their actions to be seen as legitimate.
Whether on a global scale through climate change activism and the environmental movement to the Guardian ending advertising for oil companies (See Ritson’s great article recently in Marketing Week for more on this) to Ethical Consumer magazine’s ever increasing lists of consumer boycotts of unethical brands to actor pressure ending BP’s sponsorship of the RSC, the corporate world is being held to task for its behavior and CSR increasingly appears inadequate as an answer.
So what next for CSR?
As consumers we are no longer making decisions based solely on product selection or price; we are assessing what brands say, how they behave and what they stands for. And we support those companies whose brand aligns with our own beliefs.
Which is why the ‘what next for CSR?’ question is answered in my mind by the refinement of branding, and specifically in how businesses are using their brands to shape their social purpose.
Developing a social purpose is about a business looking at itself and its actions and developing strategies based on its ideals and actions. CSR was all about what business thought was important, what they chose to do and how they chose to tell you about it. What we are seeing is the business world realising that they and their brands can have a much greater impact, and through that impact no doubt a much closer and more meaningful relationship with their customers, if they base their behaviours not on KPI’s and performance indicators, but on their beliefs and through their beliefs, meaningful social action.
For Marketing Week, social purpose is the new CSR. The aim of social purpose “is for brands to find a way of contributing to society that is aligned with their core activities, as opposed to hijacking an unrelated social cause (and then reporting on it) in a bid to boost popularity.”
Increasingly business is understanding that its role is not just about making money, there is also the opportunity and increasingly the responsibility, to make some form of positive contribution to society along the way; to have, to hold dear and to use its social purpose.
And purpose-led brands, the ones that prioritise the cultivation of meaningful, relevant relationships realise that customers can act as powerful champions of brands they believe in and foils to those they don’t. Today’s smart brands are committed to their customers’ beliefs. They also leverage their customers’ energy and involve them in everything from co-creating new products and services, to using their insights to rapidly test and iterate new features and capabilities. Capturing customers’ words, actions and insights enables companies to hone their competitive agility.
And if you think this is all just straight out of the next marketing theory textbook on branding then all the research and data now shows that purpose and profit are not mutually exclusive. Unilever for example have seen first-hand the tangible value of making purpose a core driver of growth and differentiation. Nearly half of the company’s top 40 brands focus on sustainability. These “Sustainable Living” brands, including Knorr, Dove and Lipton, are growing 50 percent faster than the company’s other brands and delivering more than 60 percent of the company’s growth.
Companies that stand for something bigger than just what they sell typically deliver higher levels of commercial success because they mean much more to their customers.
Here are a few examples of social purpose in action:
TOMS the global shoe company donates a pair of shoes for every pair sold – over 60 million pairs so far getting to children in need.
Nikes ‘Made to Play’ initiative has currently got over 16 million children into new or different forms of physical activity
By 2025 Starbucks has pledged to hire 25,000 veterans as part of their social responsibility programme
Netflix now offers 52 weeks of paid parental leave to all employees, which can be taken at any time to suit their needs
Pfizer provides free healthcare for women and children in developing countries
Half of Bosch’s research and development budget is now invested in creating environmental protection technology
Then there is Dove’s movement for real beauty, Greggs breakfast club, Lego’s Six Bricks campaign or Rolex’s art mentoring scheme – we could go on.
I do believe we are reaching a tipping point that will see the reorientation of the role of the purpose of business; to serve society, through the provision of safe and sustainable products and services that enhance our wellbeing without damaging and where possible supporting our communities or protecting our ecology. The traditional CSR story has run its course. There is a new purpose to what we do in our working lives, a social purpose, where all manner of community initiatives and social programmes have become grounded in everyday business practice and where making a positive contribution to society has become a central tenant of the modern business and the modern business brand.