The Missed Opportunity In CSR

Social impact plus… business impact?

Few terms are found in corporate America that harbor the level of ambiguity as “Corporate Social Responsibility”. Ask 10 different Fortune 500 companies what their CSR strategy is and you’ll hear 10 different interpretations, 10 different measurement frameworks, and 10 different opinions on how companies should go about it in the first place.

A little history

While the term Corporate Social Responsibility has been around since at least the 1960s, the CSR movement took another 30 years to really come to fruition. The concept itself is nothing new, however, and its roots can be traced back well over 100 years.

One of the first well-documented examples of CSR in practice comes by way of the Cadbury chocolate making company which, in the late 1800s, built an entire state-of-the-art village and community gardens for its employees and their families. The Cadbury family was particularly concerned with the health, fitness, and overall well-being of their workforce, and thus built the village for the express purpose of improving their workers’ quality of life.

One needs not think too hard about what a happy and healthy workforce does for the bottom line of a company.

Indeed, there are plenty of well-researched findings to be found via a basic Google search to support a positive correlation between a healthy workforce and cost savings. Mr. George Cadbury was simply ahead of his time.

As it turns out, the village of Bournville remains, to this day, one of the nicest places to live in all of Britain. And over a century later, Cadbury is still the second largest confectionery brand in the world (just behind Wrigley’s).

Fast forward to today

Today, CSR, as well as its cousin, cause marketing, are somewhat mature business practices engaged in by most of the brands we’re familiar with. In fact, the speed with which these strategies have evolved over just the last 10 years have inspired many in the field — executives, business ethics professors, consultants, impact investors, sustainability experts — to ask what’s next.

What’s next, from our perspective, is addressing a missed opportunity in the world of CSR that nearly every Fortune organization of today stands to benefit from: quantifying the degree to which CSR drives business performance. Traditionalists would refer to this simply as return on investment — a term that is not often used in the context of CSR outcomes — and the dollars-in, dollars-out model is not one that is generally considered in the space.

The dollars-in / dollars-out return on investment model is not one that is generally considered in the CSR space.

What is considered, typically, is the social impact of a given cause strategy. Social impact can be thought of in terms of the extent to which a given community has been positively affected by a particular strategy.

(There’s a third impact, too, which is environment, and together, people, planet, & profit make up the triple bottom line philosophy that is becoming increasingly incorporated into the ethos of many management teams. For the time being, however, we’ll focus on social and business impact, and get to environmental impact further down the road.)

Think of it this way…

A good example to illustrate this concept of measuring social impact might be a soft drink brand partnering with an economic development organization to empower communities in developing countries with the means to install fresh water wells in their villages, thereby increasing access to potable water, improving sanitation, increasing quality of life for the community as a whole and strengthening the economic health of the entire region.

In this example, the social impact can be measured in terms of number of wells built, number of individuals benefitted who previously were without access to clean water, reduction in number or severity of illnesses reported, and the region’s economic output — be it reduced unemployment levels, number of jobs or businesses created, per capita income, or related metrics — compared to benchmarks recorded prior to engaging in said cause strategy.

Where are teams focused now?

Most teams in 2016 fall into two social impact camps. The first have frameworks in place to measure and report on the degree of social impact their cause strategy yielded. The second group understands that, while their cause strategy is likely realizing a social impact, they aren’t so much concerned with the degree to which this may be occurring.

Additionally, regardless of which social impact camp a team falls into, many are attuned at some level to the reality that their cause strategy is driving business performance — namely employee satisfaction and employee engagement.

But research shows that the business impact actually goes well beyond those, influencing the organization’s bottom line by driving sales, revenue, and customer loyalty & satisfaction.

New opportunities for savvy organizations

With value-focused strategies and partnerships becoming ever more common and embedded in corporate workforce cultures — from the C-suite to summer interns — the focus of CSR measurement needs to widen beyond the metric of social impact and ultimately consider the degree to which CSR carries a business impact as well.

If a business is able to measure how its CSR strategy is driving business results, it unlocks enormous potential for the organization and removes tangible obstacles for the teams leading its implementation.

These concepts will be explored in subsequent posts — highlighting research demonstrating the relationship between CSR and business outcomes, building out a methodology to quantitatively measure the impact of that relationship, and articulating the manner in which we’re proposing to support Fortune organizations in this effort.

For now, the message is clear: there are huge opportunities in CSR that are being overlooked by Fortune companies — largely due to the absence of clear measurement frameworks and targeted tools to apply them.

If we can equip brands with the proper instruments for measurement, we can facilitate more efficient management of cause-oriented initiatives and, ultimately, usher in a more informed, creative, and sophisticated era of business-driven corporate social responsibility.

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