I gave a talk recently to a group of senior managers of a large multi-national bank on how social impact needs to become a part of the fabric of any for-profit organization. I used my own personal journey on the road to being a social entrepreneur to articulate my thoughts. Social responsibility cannot be construed as opposing the principles of competition and profitability, in fact far from it. Not only can in resurrect the brand image of any organization and reinforce its standing as a trustworthy entity in the eyes of its stakeholders, it can actually add directly or indirectly to the profitability of the business. It was heartening to see that seasoned business leader crowd nod in agreement. Signs of changing times?
American Apparel differentiates itself from low-cost competition with socially acceptable and sustainable production (e.g., domestic production, higher average wages, and compliance with environmental interests). So does Fab India with its backward integration of artisans and keeping age-old dyeing traditions alive while they show their marketing savvy in getting those weavers their due. Allianz Global Investors have invested in a Dialogue Training Centre at their headquarters in Munich, not as a philanthropic CSR measure, but as an inherent operation to bring in mindset change in their leadership that is bound to impact their ways of conducting business.
I believe that the days of “aligning brand” to CSR are over. The brand and therefore the business have to demonstrate profitability through social impact. A study done by Deloitte L.L.P. in 2008 suggests that many companies may be missing the opportunity to leverage volunteerism to develop business and leadership skills. Deloitte surveyed 250 human resource managers from Fortune 500 companies across the U.S. as part of its 2008 Impact Survey. About 91 percent of those surveyed agreed that skill-based volunteerism — applying one’s expertise in areas like technology, business strategy, human resources or finance to a nonprofit’s operations on a pro bono basis — can actually sharpen that employee’s professional and leadership skills.
But a miniscule of them actually think about this as an area to demonstrate profitability. Its high time Triple Bottomline, a phrase was coined by John Elkington in 1994, to describe the concept that a company’s responsibility be to stakeholders rather than shareholders, is adopted as a norm than as an aberration. In this case, “stakeholders” refers to anyone who is influenced, either directly or indirectly, by the actions of the firm.
Corporate social responsibility as it is seen today by organization is no different than an ISO standard, a seal of ensuring quality in the world of global “citizendom”. It is worn as a badge to demonstrate credibility and communicating the “intent of ethical behavior”. Its important no doubt, but I firmly believe that if corporate social responsibility is understood to be a core competency, which strengthen intangible and temporarily inimitable assets such as integrity, credibility, reputation, and human or social capital, it enables companies to create innovation, develop new markets, clearly differentiate themselves from competitors, or influence the competitive environment to their benefit. Merely showing off charitable gestures, sponsoring, or taking on pro-bono projects, without having such activities anchored in the business philosophy, cannot generate sustainability. Profits and Ethics are not contradictions, they are two sides of the same coin of entrepreneurial success.