By Sean McNamara, Senior Associate, Reputation Australia  

Corporate Social Responsibility (CSR) is one of those phrases that business struggles to define, both in terms of what it means and, more to the point, what it might deliver.  

The Australian Centre for Corporate Social Responsibility defined CSR, on 2007, as:

The responsibility of an organisation for the impacts of its decisions and activities on society and the environment, through transparent and ethical behaviour that:

1. Is consistent with sustainable development and the welfare of society
2. Takes into account the expectations of stakeholders
3. Is in compliance with applicable law and consistent with international norms of behaviour
4. and is integrated throughout the organisation.  

The US group Business for Social Responsibility’s definition of CSR is: “achieving commercial success in ways that honour ethical values and respect people, communities and the natural environment”.  

Just how that fits in with any company’s basic reason for existence, to make money for its shareholders, is anyone’s guess. And where it leaves directors, and corporate governance, is something approaching a feeding frenzy for lawyers.  

Mirko Bagaric, from Deakin University in Victoria, has highlighted just how ridiculous the whole CSR process is.  

Writing in The Sydney Morning Herald on February 7, 2011, he said: “Talk of ‘corporate social responsibility’ over the past decade has been shown to be nonsense. And so it should be. Corporations exist to make money for their owners (the shareholders) and so long as they comply with the law and pay their tax they have discharged their responsibility to the community”.  

And measuring CSR and its impact is simply not addressed in the definitions despite the fact that what is being spent is otherwise dividends to shareholders.  

Fred Robins, from the Adelaide Graduate School of Business at the University of Adelaide, pointed out, in an article in Corporate Governance in 2008, that: “any revenue resulting from CSR initiatives can not be a direct consequence of such initiatives. The precise benefit-cost relationship between CSR and any measure of revenue is virtually impossible to measure”.  

The truth is that CSR is a cover for two well-known principles in business - brand and reputation protection and the “licence to operate”.   And protecting those principles requires careful planning, well-defined budgets, sound and transparently policies, an integrated approach, avoiding being trapped into long-term alliances and activities of little benefit to the business and ensuring that the actions of the business do not limit its future activities. And the process needs to be sustainable throughout the business and not dependent on the activities of individuals or groups within that business.  

Balancing the short and long term needs of a business is perhaps the key challenge for any CEO. But, when it comes to protecting brand and reputation and the licence to operate, he or she must recognise that such a balance needs to be struck, one that will continue long after his/her departure, one that maximises return in both tangible and intangible ways and avoids the traps laid by ambitious politicians and community activists.  

It’s a big ask but to not do so may lead the business into an expensive and dangerous place where, to quote Ronald Reagan, ‘’there are no roads”.     

Reputation Australia has extensive experience and skills in the development and operation of integrated brand and reputation protection programs and corporate giving and community support policies. Call us on (02) 8021 9404 to discuss your needs.