CSR and beyond: Is it a myth?

Annie Hayes

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CSR and beyond: Is it a myth?

By Annie Hayes

Leo Martin balances the books between a rising tide of CSR and high-profile campaigns including Tesco’s ‘computers for schools’ with falling interest and support for charitable organisations.

Research conducted by the National Council for Voluntary Organisations (NCVO) shows a gap in public perceptions about charity and non-governmental organisations funding and the actual figures.

Just 4% of subsidies come from business a fraction of the 24% the public believe is being contributed by companies.

At the NCVO’s annual conference in London this year, it was pointed out that this mismatch was striking not only because it was so large but also because business contributions to the ‘third sector’ actually fell last year, unlike all other sources of income for these organisations.

The question raised at the conference was whether corporate social responsibility (CSR) is a myth and whether business boosts about corporate philanthropy and CSR were diverging from the reality of falling interest and support for charitable organisations.

The harsh reality of a rising CSR tide combined with falling corporate generosity seems hard to understand at first, but a number of issues addressed in this column over the last few weeks highlight what is really going on.

The rising CSR wave
All the evidence supports the notion that CSR activity is on the up. The Corporate Register (corporateregister.com) does a very useful job of tracking all the non-financial reporting issued by companies. Results point to a dramatically rising trend from the mid-1990s onwards. Taking this reporting as a proxy for CSR activity in general suggests therefore that there is indeed a rising CSR tide. But why has this not then translated into rising corporate donations and support for third sector organisations?

The rise in corporate reporting is actually part of the answer to this question. Companies have focused on ‘glossy reporting’ rather than doing or giving.

The second reason is that CSR has moved away from a core focus on community and environmental activities towards a wider set of activities fixed upon responsible business practices towards all stakeholder groups.

This rise in glossy reporting has been accompanied by a considerable effort amongst companies to catch the rising CSR tide.

This has led to lots of activity in the engine room of companies to increase, capture and to join up CSR activities and to present them in a coherent way to internal and external stakeholders.

For example, much work now goes on to make sure that the company is included in investment indices like FTSE4good and the Dow Jones Sustainability Index.

Companies are spending time completing Business in the Community’s ‘corporate responsibility index’ application (which leads to a published ranking on overall corporate responsibility performance).

Companies are also working on embedding good practice. As we have seen from previous articles in this series, there is no point in having an excellent reputation for community contributions or charitable giving if employment practices are lousy.

This has forced companies to focus on joining up their CSR practices to ensure that reputation is protected in the round. This in turn has been driven by press attacks on companies that have tried to combine a PR glossy presentation on doing good in the community with some basic reprehensible behaviour like mis-selling.

So a great new focus on corporate philanthropy and community contributions has not arisen from the rising CSR tide because the focus of companies has been elsewhere. In some ways this is a good thing, because CSR is unsustainable if it is not joined up into responsible business practice towards all stakeholders. But it is very disappointing for third sector organisations that are scratching around for funding.

The second part of the answer comes from the activities that businesses are undertaking in the community. Corporate philanthropy and the donation of cash is declining because it is not linked up with the company’s core mission and does not bring the benefits that companies can accrue through more focused activities.

What we are seeing is much more sophisticated relationships between corporations and the third sector, as both sides try to build win-win partnerships.

For example cause-related marketing is rising in the UK and the sums of money can be considerable if you happen to be in the right one! Tesco’s computers for schools raises about £7m a year and BA’s change for good accrues £1.8 million for UNICEF.

What is striking about both these examples however, is that the companies involved do not donate themselves. Rather they use their assets and their customer contact to encourage their customers to make donations. However many charities scratch around unable to find partners, especially if their causes are not so high profile or readily marketable.

Companies are also putting together carefully crafted business cases for their community involvement activities. This usually means that the charity has to work hard to bring a package of benefits to the business in return for its support. The support given by businesses has also become more conditional on receiving these business benefits.

For example, companies are developing volunteering schemes combined with use of company assets, but expecting employees to come back inspired, motivated and loyal. Charities therefore have to develop programmes for these companies that provide these outcomes.

In terms of the future for corporate philanthropy and community involvement it is likely that these trends will continue. We will see a fairly static pot of money and support from the largest companies going towards good causes but a rise in other types of support.

Conditionality and focus on business benefits will intensify. The area where the pot is likely to increase is with smaller listed companies and private companies. In these areas the trend towards more overt CSR is trickling down from the large companies.

There are two other areas of hope for third sector organisations. The first is the increasing involvement of business in the provision of publicly funded services such as schools and hospitals.

In these areas companies are increasingly aware of the importance of demonstrating that their activities will benefit society, not just narrowly from the operation of publicly-funded services but more widely. The second is the need for global corporations to demonstrate that community involvement is not just in the country of the HQ but is a global commitment. Charities that are able to partner with corporations around the globe also have growing opportunities to benefit from deepening community engagement.

Leo Martin is director and founder of GoodCorporation, the corporate responsibility standard and is the principal character in the BBC’s series, Good Company, Bad Company.

Other articles in this series