Internalizing CSR – The Top 3 Essential Elements

As we look back at the first decade of the 21st century, taking a very broad overview, reflecting over all areas of human action, the overall picture seems quite dismal for the people on this planet. This may sound like a sweeping statement, but is really the answer if we are in agreement on the answer to the question-has the human race moved forward in the first decade of this century in terms of human development, progress, equality, understanding, and just simple well-being? My answer is simply, no. Interestingly enough, amongst the few areas that do show positive development in this period is CSR. This innocuous enough statement is bound to immediately raise a few eyebrows, I realize! But I will get to this point later, when talking of CSR 2.0. Here I would even venture to add that growth in the field of CSR has perhaps been second only to growth in communications and information techno-logy, as far as the fields of interest and relevance to the corporate sector are concerned. The implications of this are immense and multi-layered. And hopefully most if not all, will be positive.

The story so far

Just to recap, CSR in 10 years has rapidly evolved from a widespread belief at the start of the decade that corporate philan’thropy and CSR are alternate terms for the same ‘thing’, to a belief, at least being talked about increasingly and globally, that CSR should be at the core of all business operations. The practical side of this is perhaps still mainly limited to developed countries, but there is any number of developing countries, or emerging economies if you will, that are fast catching up across Asia-Pacific, Africa and South America.

So the direction has been set; or at least there is enough activity and more importantly thinking, that is going on globally, that for CSR assures further and ongoing research and evolution towards excellence. The conclusion – CSR has stood the proverbial test of time. This, in spite of perennial critics and even active opponents; ironically from within the corpo-rate sector itself, more than from any other group. Consider for example the reaction from the corporate sector when the financial crisis first hit the world. Many across continents reawakened the philosophy of Milton Friedman and vociferously advocated, even demanded that companies should only focus on the bottom line and make money, and that the financial crisis leaves absolutely no room for luxuries like CSR. This reaction was quite ironic, completely ignoring, as it did, the possibility that perhaps one of the main causes of the financial crisis was the absence of embedded CSR! If Lehman Brothers et al had internalized corporate responsibility to a level where the irregularities just could not take place, would there have been a financial crisis at all then?

Nevertheless this was a major attack and lasted several months but at the end, gathering few real followers, it lost most of its steam. All credit to CSR and all those who are its foot soldiers, wherever they may be in this world!

CSR 2.0

If anything, the proponents of death to CSR fuelled even greater thought amongst the CSR stal-warts. Perhaps it became even an opportunity for introspection and thus CSR’s best defense on the evolutionary path.

I for one am quite taken in the arguments propounded by Wayne Visser in his new book, The Age of Responsibility: CSR 2.0 and the New DNA of Business, which is really a ‘must read’ for everyone in this field. Although I disagree with him that ‘CSR 1.0’ was of little use and even off track. The value of CSR 1.0 was in creating an awakening. With apologies to Wayne, I would dare say that because there was CSR 1.0, he was motivated to research and advocate CSR 2.0! Continuing evolution of thought is an essential prerequisite to, yes ?. sustainable growth. And that as we know, is the very core of CSR.

Internalizing CSR

Even as research and knowledge-based debate on various issues in the CSR space gathers pace, there is fairly universal agreement on various other aspects. These include some quite fundamental ones – the need to embed CSR into the organization, or Internalizing CSR as tbl has themed this issue, being one position with wide acceptability. There is already a fair volume of writing on this subject from all over the world, examining both theoretical models and actual case studies. But like everything else in the CSR sphere, there are always finer points that do need to be looked at from different perspectives from time to time, as an integral exercise under the ongoing evolutionary process discussed earlier.

But first the basic question ? what are the minimum requirements and the minimum areas of focus for internalizing CSR?

The ‘Social Entrepreneur’ corporate leader

Of all the possible prerequisites, the single most critical requirement for internalizing CSR has to be a firm, unqualified buy-in by the head of the corporate entity ? the CEO or the managing director or the president, or any other title that the top-gun goes by. Some human endeavours require a high quality of collective eadership. Others require a high quality of individual leadership. Arguably, where individual leadership is more suited for the achievement of given objectives than collective leadership, such individual leadership must necessarily be of a far superior quality than the quality of leadership of individuals in a collective leadership scenario. Such individual leadership then itself spawns and sustains collective leadership too. Internalizing CSR may have as its goal the permeation of CSR practices within all business operations of a company, and hence require a lot of people in the company to be active converts. But the fact remains that the success of any such effort majorly depends on leadership that the head honcho can bring to the effort.

Leading on from this, to my observation, there are two levels of positivity that the leader brings. At the lower level, the CEO may at best have an educated general understanding of CSR, but believes in it
sufficiently to allow free rein to a senior colleague or even a senior colleague with a full team or department, to plan and implement a CSR strategy for the company. In other words he ‘leaves it to the experts’ to do the job, but supports their efforts fully at the Board level or wherever else such support is needed. At the second or higher level, the leader goes beyond delegation, approval and support, to actually be an active participant in the strategy planning and execution.

The leadership role in inter-nalizing CSR is a value-added extension to the standard ‘lead by example’ diktat for all leaders and including corporate leaders, which seeks to provide moti-vation, even inspiration for the employees. In the case of CSR, a leader’s active involvement helps to shape company policy, acceptable behavior and the actual rules of engagement to be followed by all employees not only with each other, but also with all other stakeholders, internal and external. Thus for example procurement managers? upstream and sales managers? downstream must adhere to certain CSR-strategy stipulated conditions when dealing with suppliers (procurement side) and with retailers (sales side). This is putting it very simplistically and does not negate that even otherwise the managers in a reputable company need to act within a highly ethical framework. The point here is simply that embedding CSR into all business operations will entail some modification in how employees have to act to perform their given responsibilities. And where such performance involves interaction with external stakeholders, the benefits of the CSR strategy are also extended to such other stakeholders by default.

R&A

Internalizing CSR is a substantial and daunting undertaking. Research, as in collection of data, and its Analysis, or R&A, is critical of course to planning any strategy and a strategy to embed sustainability practices into the organization is no exception. Depending on the size of the company and the size of its
operations, just the collection of accurate data and keeping this updated can be a hugely challenging task. Nevertheless, as the sources of data are mostly all internal within the company, the research is still comparatively easier than research required for another project where the sources of information and data are mostly external.

But even within a company, some data is often not available, as record-keeping may have been poor as nobody earlier thought the data would be of use later on. And where it is available, sometimes its accuracy may be doubtful. Nevertheless this data collection has to be done, as painstakingly as possible and concurrently with other actions. Analysis of the data needs to be focused, keeping in mind the specific objectives for which the data was collected in the first place. The broader buy-in But even before data collection starts, there has to be first a clear understanding across share-holders, the Board, the management and the employees, of the vision and the objectives behind the proposed internalization of CSR. Getting everyone on board is again not a simple matter. And this is where the CEO?s leadership can really play vital role. If the CEO is CSR-savvy, so much the better. If the CEO believes in it but does not personally have the depth of knowledge to be convincing in front of a possibly skeptical audience, then it is necessary to have an expert either on the payroll or get an external specialist to build the case for the CSR internalization strategy.

And there is only one case that must be built ? the business case. At no point should the planners forget that CSR does have a triple bottom line and a company that cannot make profits, or even cut losses, by implementing a CSR strategy will not be enacting that strategy for too long.

The Maths

A strategy for internalizing CSR must, of necessity, document qualitatively and quantitatively how the internalization processes will over time either yield savings or increase operating margins, or both! Further, the strategy needs to show how the processes (and the benefits) will be sustainable. And to achieve all this requires as already said, leadership from the very top, data, specialist expertise and not least, buy-in of all stakeholders and especially the employees.

While presenting the business case to employees will serve to clarify concepts, clear any mis-perceptions and evince their support, there must be other efforts to get the employees really involved and be motivated enough to be highly responsive and proactive. Here the reference is not only to any monetary incentivization being offered, although a well-thought out rewards scheme will be ? rewarding!

Any volunteers?

In this regard, corporate volunteerism is an area that I believe needs close examination by all companies embarking on an Internalizing CSR strategy. It is not possible in this space to get into a discussion on this subject, but it is important to identify corporate volunteerism as a highly beneficial tool for employee motivation and reinsuring the success of the Internalizing CSR strategy.

Despite all their possible other failings, humans do have an inherent social sensitivity. A person who can feel proud within himself or herself of being of service to the society or to the country, will be a happier, more motivated person. If we believe in this, then the rationale for planning and putting into practice a corporate volunteerism programme in the company is understood.

Taking this further, if company employees make an effort as volunteers for an external cause, then making the effort for the success of the company’s broader internal CSR strategy will come naturally. And at the end of the day, corporate volunteerism can just require time from the employees, not money. The benefits accrue for everyone ? the employee, the company, the society.

Be Sociable, Share!

• 
•