How to practice strategic CSR?
What are the critical elements?
The critical elements are first, to
examine the company's value chain
and identify both the positive and
negative social or environmental
consequences of each activity.
Companies must then work to
mitigate negative impacts, and may
choose to highlight positive ones as a
source of competitive differentiation.
Second, companies must examine
social conditions in the key regions
where they operate, and identify the
social constraints that limit their
productivity or competitive edge.
They should then pick a small
number of social issues to address
through the use of their resources,
including their philanthropy, in order
to make a significant change in those
conditions that will be favorable both
to society and to the business.
†Few Phrases are as overused and
poorly defined as 'strategic
philanthropy.' The term is used to
cover virtually any kind of charitable
activity that has some definable
theme, goal, approach, or focus. In
the corporate context, it generally
means that there is some connection
however vague or tenuous, between
the charitable contribution and the
company's business. Often this
connection is only semantic,
enabling the company to rationalize
its contribution in public reports and
press releases. In fact, most corporate
giving programs have nothing to do
with a company's strategy. They are
primarily aimed at generation goodwill
and positive publicity and
boosting employee morale.
Cause related marketing through
which a company concentrates its
giving on a single cause or admired
organization, was one of the earliest
practices cited as strategic
philanthropy, and it is a step above
diffuse corporate contributions. At its
most sophisticated, cause related
marketing can improve the reputation
of a company by linking its identity
with the admired qualities of a chosen
non profit partner or a popular cause.
Companies that sponsor the
Olympics, for example, gain not only
wide exposure but also an association
with the pursuit of excellence.And by
concentrating funding through a
deliberate selection process, cause related
marketing has the potential to
create more impact than unfocused
giving would provide.
However, cause related marketing
falls far short of truly strategic
philanthropy. Its emphasis remains
on publicity rather than social impact.
The desired benefit is enhanced
goodwill, not improvement in a
company's ability to compete. True
strategic giving, by contrast, addresses
important social and economic goals
simultaneously, targeting areas of
competitive context where the
company and society both benefit
because the firm brings unique assets
and expertise.†
Let's look at some hypothetical
instances. An oil refining company
pledges its support to an afforestation
project. A large retailer decides to
slash its fleet size by 35%. A paints
manufacturing company undertakes
to clean up the local waters. On the
other hand, a software company's
employees work for a day in a month
in a local community hospital. A
company adopts and funds a local
school. Of these, what can be
characterized as Corporate Social
Responsibility initiatives and
Corporate Responsibility initiatives?
Again, we don't see the distinction in
terminology that you refer to.
However, the first examples are
clearly value chain impacts, whereas,
the latter are acts of corporate
philanthropy that seem to be
unrelated to the business. We call
social issues "generic" when they are
unrelated to the business competitive
context and value chain activities.
Much corporate philanthropy
presently goes to generic issues, but
we see that as less helpful to the
business and, because it does not
engage the expertise and resources of
the business, less impactful for
society.
