A rose by any other name…
Why is Corporate Social Responsibility so hard to get right?
Most business leaders accept that society is increasingly expecting organisations to do more than just create profit. Employees are seeking out employers who demonstrate some form of social responsibility, or at least awareness, as part of their commercial thinking. Consumers and clients are increasingly favouring brands who have social conscience at their core, and investors are increasingly assessing the maturity and sustainability of businesses on whether their boards are weaving social expectations into their commercial strategies. So why are so many business leaders paralysed at the start of their CSR journey?
Part of the problem may be the confusing terminology used to describe what businesses are trying to do. Within professional services, Human Resource Directors, who are usually the main internal stakeholder, use the term “Corporate Social Responsibility” to cover both what the business is doing in terms of social good as well as their internal employee programmes. The focus on CSR is often driven by employee engagement surveys, or by difficulties in attracting or retaining talent.
B2C businesses focus on “Social Purpose”, driven by consumer/client insight and managed by the Chief Marketing Officer in an industry which is, by its very nature, incredibly responsive to changes in the way society thinks.
“ESG” on the other hand, is the term more prevalent in financial services, and pays tribute to the fact that the driving force behind any action is usually compliance or regulatory issues, and is usually headed up by the Compliance Officer or Chief Operating Officer.
So, if we ignore the issues with the nomenclature, are the priorities the same across industries? The answer is no. This is not in itself a problem, but the resulting functional-silo thinking is.
Within professional services, because CSR is employee-centric, the commercial solutions that CSR can provide are focused in the same way. HRDs will prioritise employee engagement and “glue” through having a business-wide purpose to which all employees can contribute regardless of role, skills and hierarchy. The social impact strategy will focus on pro-bono work aligned to the key skills of the organisation, where by default they can add most value, as well as Diversity and Inclusion and Gender Pay Gap initiatives. The output is a clearly differentiated Employer Brand, which intrigues top talent, excites the current employee base, and steps away from the tried and tested. The result is business growth, increased innovation and aspirational leadership.
B2C “Social Purpose” strategies need to demonstrate cleverly to consumers that the brand has understood and reflects their very real concerns. Recyclable packaging and ethical sourcing of products are now the absolute base line, and the bar has been raised. To compete, B2C Social Purpose strategies have to be authentic, meaningful, creative and sustainable. Many challenger brands who do not have the finances to support large scale social projects, are instead maximising the emotional equity of their consumers, and creating social movements around a cause. The output is a new depth of customer loyalty, and the brand finding itself central in conversations about new and progressive consumer understanding. The result is growth in market share, the “Social Purpose” bar being perpetually raised and a wider meaningful social contribution across the B2C market.
Within Financial Services, operational leaders are increasingly finding themselves subject to questions about ESG both with High Net Worth and Institutional investors; in addition to employees wanting CSR to be at the heart of their internal brand. All external stakeholders want assurance from a risk mitigation perspective, but increasingly clients want to align their investments with their personal values. Not everyone feels the need to invest solely in the Impact Investment space, but equally, where private philanthropy has always been just that for HNWs, individual and institutional clients also want to ensure that investment managers’ due diligence processes are ethical. Given the developments in this space, perhaps ESG should have been called GES as the impetus has come definitively from Governance, has covered the Environmental areas, and is now moving onto the Social element. The output is a future-proofed due diligence and investment process. The result is depth of client confidence and an ability to break the traditional perception of the financial services industry as a profit machine, with, at times, questionable morals.
The most powerful CSR strategies ensure diversity of thought – and are equally driven by employee, client and investor priorities. To deliver genuine business impact, CSR strategies need to be developed cross-functionally to ensure alignment in thinking and execution of the strategy across the business. The same overall CSR strategy needs to be the bedrock to deliver engaging brand differentiation, a strong Employer Value Proposition and a demonstration to investors on the brand’s progressive thinking. HRDs need to harness the power of their CSR strategies as a brand differentiator. CMO’s need to think about how to put together a meaningful piece of collateral for their investors which demonstrates the brand’s progressive thinking. Investors expect HRDs to build strong Employer Value propositions to retain the best people and build a sustainable talent pipeline?
The only thing that matters is identifying how leaders can have a positive impact on both society and their business by deploying their assets in a value-adding manner to a social cause that resonates with their brand and their people.