What is the value of corporate social responsibility?

Is corporate social responsibility a token marketing concept conducted on the fringes of business hierarchies? Or has it transformed into an essential element of an organisation’s strategy? Natasha D'Souza investigates

Until mid-2014, the Indian city of Pune disposed of its rubbish – more than 1,600 tonnes of solid waste per day – in a landfill. But residents began to protest. The solution? For the 2.6 million-strong population to segregate waste and build pits to turn organic matter into compost.

Employees of Cummins – a Fortune 500 firm that produces engine technologies – organised rallies and door-to-door campaigns to create basic awareness about waste segregation. Cummins engineers, meanwhile, designed a cost-effective, durable and ergonomically user-friendly push cart for the waste-collectors.

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We are entering an era that necessitates greater transparency and accountability

The programme has reached more than 14,500 households, leading to a 66 per cent increase in separating dry and wet waste at source. The treatment of the waste in local composting pits has increased by 400 per cent.

“Cummins takes a broad, holistic approach towards sustainability. For us, it is about serving and improving the communities in which we live. If we have weak communities around us, our businesses will also be weak,” says Emily Johnson, Director of Global Corporate Responsibility, Distribution.

This is a compelling example of a practice once considered a superficial requirement and assigned to a single employee or a makeshift team: corporate social responsibility, or CSR. Its proponents insist that – instead of a process tagged on purely for marketing mileage – businesses are focusing on CSR as stakes grow higher.

Consider the financial and reputational impact BP suffered after the 2010 Deepwater Horizon oil spill, the Volkswagen emissions scandal or the recent mileage controversy and it is clear businesses must adapt to an era that expects more than the mere production of goods and delivery of services.

With a growing worldwide population, climate change, shifting sociopolitical developments and the increasing scarcity of natural resources, the conversation about the case for CSR is rapidly acquiring gravity and urgency, emphasising the need for leaders and organisations to design and implement sound sustainability programmes.

“Sustainability goes beyond CSR,” says Jennifer Kang, Head of Sustainability and Community Engagement for North Africa and the Middle East at banking powerhouse Standard Chartered. “During my years in the hospitality industry,” she says, “it was all about presenting a cheque at the end of the year to a charitable initiative. Today, sustainability has blossomed in terms of impact but also organisational involvement. Our leaders and employees get hands-on, it’s part and parcel of doing business today.”

Our sustainability efforts go a long way with employee retention and also put us in the spotlight for recruiting top-tier talent

Alanna Turpin, Group Sustainability Manager, Omnicom Media Group MENA

Thought leaders and experts maintain CSR is about abiding by the ‘triple bottom line’ (TBL), adhering to the principles of advancing “people, profit and planet” in the long term.

“CSR used to be something a company could raise to say, ‘I’m doing something good’,” adds Anne- Dominique Janecek, Founder & CEO at AD Synergies. “But today, it’s a reality, something tangible and measurable
– to establish social and ecological processes, and use business techniques and private sector approaches to find solutions for cultural, social and environmental problems.”

But CSR is not without its critics. “A proliferation in sustainability programmes does not reflect their relevance or fiscal returns – it’s jumping on the bandwagon to appear politically correct. Corporate responsibility, citizenship, sustainability, triple bottom line, are all jargon used to lend credibility,” stresses Aneel Karnani, Professor of Strategy at the University of Michigan’s Ross School of Business.

“Business dictates that you can only have one bottom line,” he says. “Companies fundamentally exist to maximise shareholder value… not to pursue society’s interest and sacrifice profits.”

Karnani concedes there exists a “zone of opportunity” where business and societal interests intersect. He cites the surge in food and beverage companies catering towards healthy, low-fat, less processed options, or the car industry designing more fuel-efficient vehicles.

But he emphasises: “Such options only became the norm when it became profitable. Even Cummins at the outset saw the benefit in investing in the Indiana town where it was founded to attract and retain talent. These companies are first and foremost satisfying shareholders’ interests
– societal interest is tangential.”

These are credible concerns, it appears we are entering into an era that necessitates greater transparency and accountability. Corporate sustainability would benefit from being overseen by a unilateral body.

As long as companies are benefiting from sustainability programmes, including heightened brand equity, stronger reputations and a more engaged workforce, the practice appears here to stay. “CSR definitely attracts a more aware and socially conscious graduate,” says Janecek, “but companies are also attracted to engaged and socially conscious graduates or entrepreneurs.”

“Our sustainability efforts go a long way with employee retention and for recruiting top-tier talent,” says Alanna Turpin, Group Sustainability Manager at Omnicom Media Group MENA. “Young people today are looking to work at a place with purpose. Sustainability programmes can fine-tune that purpose and inspire your employees, which are a company’s biggest asset. Indeed, sustainability amplifies a business on every possible level.