Is this the end of corporate social responsibility?
Corporate social responsibility (CSR) doesn’t cut it any more. In fact, leader companies are putting distance between themselves and this approach. They don’t find it to be relevant to their growth or business models.
The Canadian government was interested in understanding future trends in CSR and commissioned a study to explore this topic. The most dramatic conclusion from the study? Companies are pivoting to purpose.
The study interviewed 32 companies known to have established corporate social responsibility practices. Respondents represented a broad cross-section of Canadian industry, from small business to large multi-national companies. Responses came from a wide range of industries and spanned the country. Interviewees were from public, private and co-operative firms, held mostly senior leadership positions and managed sustainability or corporate social responsibility portfolios.
As shown in the chart below, a key takeaway is that there is a continuum of CSR practices among the respondents, from a community investment focus, to a CSR strategy, to CSR integration and finally to social purpose.
Almost half of the companies appeared to be at level 4: they indicated that they had, or were developing, a social purpose or mission as the reason for the company’s existence.
This reveals a trend in companies developing and integrating a social purpose into their business models. For several companies, the term CSR is no longer relevant. A significant minority commented that they don’t use the term and think it is an outmoded approach: "CSR as a term is outdated"; "We consider ourselves post-CSR"; "We don’t use the term CSR"; etc.
Notably, almost half the companies indicated they have, or were planning to, adopt a social purpose (PDF) as the reason they exist and to build their social purpose into everything the company does. Those that have done so are most likely to say they don’t use CSR terminology. They view social purpose as a more holistic approach to the business, in which the business model is infused with their social intent and not treated separately.
Here’s an example from one interviewed company:
We haven’t used the term CSR for a long time. We are a social purpose business. The difference between a social purpose business and a business with a CSR program is that a CSR program is bolted on. CSR programs thus have an indirect connection to the business whereas social purpose businesses have mechanisms that address social purpose holistically. All our programs are tied into supporting that social purpose which is generally geared towards improving the community or society and that’s how we operate. Our social purpose is linked into our mission and our value statement, the overlap is pretty much the entire thing. So, everything is aligned.
It hasn’t always been this way. From the experience of these social purpose companies, this shift away from CSR has accelerated over the past five years. The companies reveal the main shifts have included a transition from ad hoc, transactional and incremental approaches to those which are strategic, holistic, social purpose-driven and transformational.
Other top shifts have included a focus on integrating CSR into the business model, a shift away from CSR strategies toward social purpose business models, and a shift to becoming data-driven and actively measuring, tracking and disclosing social impacts. There has been a shift in thinking of CSR as the social responsibility of business, to seeing it as a way of doing business, and along with that a shift to thinking of CSR as "essential for business success" rather than as a "nice to do."
These ideas are set out in the chart below.
As CSR companies mature, they become more strategic and impactful. Leaders push into new territory in their quest for differentiation and impact. Yesterday these companies were CSR. Today — and importantly, tomorrow — they are Social Purpose.
The full study is available here.