The article in the url below is the feature of today’s Newsletter not because of its content, which is not particularly revealing, but because it demonstrates the evolution of the free market publication, The Economist’s, position regarding CSR. Ostensibly, the article looks at the extent to which CSR funding has been affected by the recession:
“As firms grapple with a brutal economic downturn, they are taking a long, hard look at the resources they devote to everything from supporting charities to making their activities carbon-neutral.”
According to a survey by Business for Social Responsibility, so far, the cuts have predominantly been to:
“Most of the cuts have been to corporate-philanthropy budgets, which typically fund charities and NGOs. For instance, Citigroup’s charitable foundation says it expects to make $63m of grants in 2009, down from $90m last year.”
More fundamental attitudes have also been affected, however:
“… a survey of 329 corporate-travel managers and business travellers published in February by the Association of Corporate Travel Executives found that only 17% of them now ranked environmental sustainability as a high priority, compared with 29% a year ago.”
And, some large scale investment projects have been scaled back:
“American Electric Power (AEP) chose to delay its plans to build a wind farm in Indiana when the heavily indebted utility found its cost of capital had soared because of turmoil in the corporate-bond market.”
In spite of all this, however, the article is surprisingly upbeat. While most firms are cutting back, the over-riding drive is cost-cutting and efficiency, and other firms (such as Walmart) see sustainability as a means to change old habits and achieve broader business goals. The article highlights recent moves by IKEA, as well as the chocolate producers, Mars and Cadbury, to build sustainable supply chains:
“So the preliminary results of the CSR stress-test are encouraging. Many firms really do seem to have found ways of making the world better while making money at the same time. A few, such as America’s GE, have built entire business models around sustainability.”
Importantly, the perception among consumers is that CSR still presents the opportunity for competitive advantage:
“Consumers’ consciences have “not been put on hold.””
Firms also see CSR issues as a way to maintain morale and keep and attract staff:
“Firms that can show they stuck to their sustainable ways during the recession may find it easier to attract the brightest talent when the economy recovers.”
The article also sees CSR as a way to re-build confidence and trust in business more generally. It argues that it was corporate social irresponsibility that got us into the financial crisis and that, as such, CSR offers us a way out.
It has been interesting to watch The Economist’s view of CSR evolve over the last five years, or so. The magazine reluctantly acknowledged the growing relevance of CSR in a 2005 special report, gradually became sold on the business case for CSR in a 2008 special report, but this is the first time I remember the magazine advocating a broader social and more moral justification for CSR—it is good to have them on board.
Have a good weekend
David
Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther/
Corporate social responsibility: A stress test for good intentions
May 14th 2009
LONDON AND SAN FRANCISCO
From The Economist print edition
The recession is a test of companies’ commitments to doing good
http://www.economist.com/businessfinance/displayStory.cfm?story_id=13648978
or
http://www.tano.org/en/art/383/
