By: Jim Wyderko
As our society begins to rebuild from the rubble of the pandemic, a myriad of complex societal issues loom on the horizon. Our world is diseased, and has been so for far longer than the onset of COVID-19. In times of crisis, we must focus on which actors in our society can make the strongest contributions to each issue. In this spirit, I’d like to propose an alternative approach to one aspect of leadership in the corporate world that is in desperate need of reevaluation: corporate social responsibility or CSR. Given the plethora of issues facing our society, corporate actors who have the capacity to make a meaningful impact must make tough choices on how to best treat the illnesses of our world. In a similar way to doctors triaging their patients, it can be helpful to organize global issues into three different groups, that with which we have no hope of fixing, those that have the potential to work themselves out with minimal corporate intervention and a middle group of issues that would benefit the most from some type of corporate action. Companies with the appropriate resources can maximize their impact by focusing the vast majority of their capital on these critical, middle group issues that have the best chances for an optimal corporate cost to global benefit ratio. While there are several issues of major importance in our society, I argue, due to its strong moral imperative, practical business benefits and powerful reputational potential, companies with the appropriate means should center their CSR strategies on an active and bold step towards mitigating the effects of climate change and improving global sustainability.
The Current State of CSR
Corporate social responsibility is usually defined as the actions that companies take to improve their public standing, hold themselves accountable and give back to their communities. Many companies have traditionally opted to take a broad approach to CSR initiatives. Scanning through most large companies’ end-of-year CSR roundup will show a number of initiatives scattered across a wide variety of areas and sectors. This approach has generally been used to match the numerous issues our society faces, including wealth-inequality, climate change, education, racism and others. While this strategy has its merits, it can oftentimes seem that companies are simply investing minimal effort in these issues so they can say they have, as opposed to actually making a strong commitment to any of them. I recognize that this instinct to hedge bets is natural, but in this case, spreading initiatives across an overly broad and vague portfolio is not the best approach. What usually results are a host of initiatives that rarely accomplish much, outside of what some describe as “cheap talk.” Poorly executed corporate CSR initiatives have long been criticized for being inauthentic, gimmicky or even a ploy to hide their true intentions like avoiding taxes or lobbying governments. This is not to say that all CSR initiatives are useless. Many are effective at achieving their desired end result. However, I challenge all companies to assess the extent to which their specific programs are having a measurable, positive impact on society at large.
While not an issue foreign to current CSR programs, I am calling on businesses with the appropriate resources to take their sustainability strategies ten steps further through enhanced prioritization. These initiatives should be the flagship programs that an organization puts its muscle behind, creating an overarching umbrella for corporations to structure their whole model of giving back. It’s time to make strong commitments that show how serious your company is about the threat to our environment, even if it may impact the bottom line in the short term. This not only makes sense morally and practically, but the right sacrifices have huge potential to benefit brand reputation in a cultural zeitgeist that is trending towards the increasing awareness and frustration with this issue.
A Morally Sound Agenda
When evaluating which issues to address and in what capacity, it can be tempting to group all the world’s ills into one bucket with each deserving similar solutions from similar actors. But we should resist this temptation and thoughtfully measure which issues would benefit the most from different types of interventions. It goes without saying that there a host of problems that need solving in our world. The COVID-19 pandemic is still ravaging much of the world, the wealth inequality gap continues to rise at a staggering rate and racism is still deeply ingrained in the fabric of how our society operates. But when triaging how corporations can make the most impact on these issues, we can generally organize these into “soft” and “hard” issues. “Soft” issues may require deeper intervention that require a more in-depth cultural cooperation from governments, organizations and individuals the like. “Hard” issues, on the other hand, benefit the most from robust monetary and structural solutions that only those with the appropriate power and access are able to execute. Now of course, the issues of the world don’t all fit neatly into each category, and this isn’t to say that corporations can’t have a measurable impact on “softer” issues, but when trying to optimize societal benefit in a race against time, the health of our environment is as “hard” as it gets. When it comes to affecting the health of our environment, corporations have unique control of systems and levers that citizens do not. This creates a strong impact opportunity for companies looking to authentically contribute to the health of our world. A shockingly small number of corporations can today, make decisions to cut their carbon footprints, slash emissions or make a large donation to organizations that will make an immediate, positive impact. These controls are inherent and unique to the relationship between corporations and the environment.
Above all, this would be a morally correct strategy for companies to undertake. Nothing matters in the long run if our planet, along with its resources dry out and crumble in a slow, tumultuous death. The long-term effects of a society stuck in a cycle of relentless consumption have created brutal environmental consequences that are disastrous for vulnerable regions. There is an urgency and scale to this issue that is unlike anything else our society faces. In order to make any productive impact on this dire situation, we must shift our thinking from blame to solutions. It’s imperative that those with means don’t wait for this issue to have tangible effects on their own lives before acting. Decision makers in the corporate space are some of the few actors in our society with the potential to make the most meaningful impact on this dire situation. They are the ones that bear the most responsibility to act on principle. Continuing to push this issue to the next generation is simply unacceptable and morally indefensible. We desperately need a culture that is compatible with our long-term survival, something that corporations are in a unique place to contribute to. Every company owes it to the future of their customers and stakeholders to craft a world that is safe and sustainable to live in for future generations.
This idea is not only moral, but practical for a company as it looks towards a future where resources will become even more scarce. Michael Porter has made a convincing argument for the benefits of shared value, the idea of a firm link between corporate success and social progress. There are numerous case studies to highlight how collective impact, the idea that complex social problems require collaboration from a wide variety of non-government and government actors, has already proven to have made “significant progress on issues as diverse as education, homelessness, juvenile justice, substance abuse, childhood obesity, job creation, and pollution.” The suggestion I present here takes this idea one step further. Environmental sustainability is one of the greatest social issues of our time and is the only issue that presents a clear and ever-present threat to the existence of our society. It is also linked to many other daunting challenges like poverty, racism and health making it the perfect issue for companies looking to make a positive impact.
To put it simply, businesses are not going to be able to thrive in a world without the resources they need to survive. In the same vein, strategically bucketing your company’s approach to CSR around this central tent pole can focus your efforts on achieving a firm end result. This also provides an opportunity for productive partnership between corporate America and government. The Biden-Harris Administration’s recent staffing decisions, namely that of Deb Haaland, Michael Regan and Brenda Mallory, along with Gina McCarthy and John Kerry highlight the new administration’s determination to reinvigorate the government’s approach to climate change with progressive ideas and establishment muscle. The recent enactment of the COVID-19 relief bill not only provides assistance to suffering Americans, but has also created space for new climate and energy related provisions. These hires and policy signals should send a strong signal to corporations that the new administration, along with congress, are willing and able to create bold policy changes. And for those corporations bold enough to reject the banality of previous CSR efforts, it presents a great opportunity. This could be the beginning of a new case study of collective impact, and the dawn of a new age for corporations to work closely with government to achieve significant progress on the world’s biggest existential threat.
Corporate Reputation and Trust
Okay, so we’ve known for a while that this approach is moral and practical. But for companies still on the fence, undertaking this new CSR strategy also creates an opportunity to build their reputation with a new generation of environmentally conscious consumers. With each generation, the percentage of those who say that global warming is personally important, grows by about 4%. It’s important to remember that the generations that care the most about this issue will be the future stakeholders, employees and consumers of companies across the globe. By dramatically investing resources into this issue, corporations can tap into these growing attitudes.
Corporations across the country may find it valuable to do something big, bold and costly to maintain the trust of the public and gain some authenticity with a new group of consumers. Costly signals, a concept usually applied to international relations and negotiations, fits surprisingly well into this analysis. These are the actions that show the world that an actor cares so much about a particular issue in the long term that they are willing damage their short-term goals. Sacrificing short-term financial gain for the greater good can be challenging, but it can vastly improve reputation at a time when corporate criticism is rising from voices in the younger generations. In addition to it not being productive, consumers are getting better and better at seeing through “cheap talk.” By turning the corner from the usual, disjointed CSR to coordinated costly signals, a brand can create trust and authenticity with subsequent generations of active consumers.
I realize that it’s not an easy pitch to advocate for companies to go against their immediate financial interests and many may ask whether an investment of this caliber is really worth it if there’s a possibility that other actors, whether domestic or global, won’t follow suit. But I encourage those with this reaction to take a longer-term view on how these actions will be reacted to by their peers. When observed in the competitive marketplace, it’s more than likely that consumers will notice these initiatives and reward the deserving companies, thereby creating a circuitous cycle where companies may quickly find themselves trying to one-up each other for said praise. The reputational benefits of leading a corporate transformation addressing the central challenge facing society at large will take shape in the long run if the program has the right protein behind it. Whatever that may be – internal consumption standards, cleaning up your supply chain, or making external investments that benefit the environmental health of communities – make sure the actions are bold, big and challenging. This has the opportunity to set off a chain reaction which molds our culture into one where robust environmental statements are not just warmly welcomed, but accepted as the status quo and necessary for continued buy-in from consumers.
This bold approach also leads to a series of questions and considerations. From a communications perspective, the most important question is how to structure these initiatives in order to get proper credit for the respective efforts? Where in the company should you make sacrifices without harming the future of your workforce? Should you methodically lay out a plan over the next five years or attempt to make a big splash in 2021? The answers to these questions will obviously differ depending on the organization asking them, but it’s important to start asking them now. The health of our planet can’t afford to wait much longer.