Tuesday, March 03, 2009

Corporate Social Responsibility Revisited

Previously in this blog, I’ve talked about the continued importance of corporate social responsibility even in the midst of retail downturns. Indeed, a fair amount of research has shown that consumers like companies that combine charitable donations with purchases; green practices that demonstrate conservation and renewable resource use; and product development that highlights an awareness of the community of users.

In some respects, it doesn’t matter if CSR is done out of selfishness (brand image) or altruism (a clear guiding philosophy embodied in corporate practices), but in other ways companies that appear to engage in corporate social responsibility for purely selfish gain are less enticing. Still, as companies like Proctor and Gamble have shown, it should definitely be highlighted so that consumers know what they’re getting.

A recent study reported in the Washington Post goes one step further and examines whether CSR helps or hurts companies. The Post reports on a study from July 2007, by Goldman Sachs which found that sustainable companies outperformed the market, often by significant margins. The WP tested that argument by creating a ranked list of 498 companies that represented -- according to IW Financial -- a broad view of socially responsible behavior… What they found: “In the worst economic turmoil in decades, when investors had every reason to shed pretensions of political correctness, companies that put time and energy into behaving responsibly seem, thus far anyway, to have performed no worse than those that didn't.”

One interesting point that the Washington Post research reveals is that companies that appear at the bottom of the SR list were companies that are a bit more insulated from consumer demand – and yet they were also trying to engage in CSR, whether as part of their core business model or as a way of maintaining profitability (i.e. energy conservation) during tough times. The ambiguity of what “counts” as CSR makes it a bit hard to put an enormous amount of generalizability on any list, but the point is that more companies are engaged in CSR than not. As the Washington Post puts it,


Since their products are in demand whatever the state of the economy, these companies are largely shielded from the vicissitudes of consumer taste; whatever these companies actually think about the norms entailed in CSR, they've decided they have no choice but to play along, recession or no recession.”

As Intel chairman Craig Barrett told Fortune. "We look at our CSR activities in pretty much the same way: you can't just do them in good times and then just forget about them in bad times and hope to get any results."

As one analyst put it, "leadership on corporate responsibility is not like a spigot that can be turned on when things are going well." CSR for long range planning is key.

CSR, whether or not it’s highly visible to the consumer up front, will be increasingly important as the less-savory business practices of the financial industry come to light and as companies are forced to make decisions about how to survive the recession.

2 comments:

Bharat Book Bureau said...

Hello,

Great Blog I will defiantly bookmark your blog. I am also having a blog related to retail
http://newsonretail.blogspot.com/ which gives latest analysis and trends in current retail industry in the present recession period.

Thanks,
James

Pragya Pallavi said...

Corporate Social Responsibility is definitely not for good times only more for dooms day. Top executives drawing heavy paychecks and management sitting on cash now understand this fact. It is we who make a society and we must understand our responsibility towards it.
Wal-Mart’s approval for Healthcare bill when organizations throughout the world are against this reform proves it is genuinely America’s pride. Wal-Mart’s letter to President Obama supporting the move is just remarkable. No doubt it is time for action.