How much social good is enough?

Citation

Pharoah, A. (2004), "How much social good is enough?", Journal of Business Strategy, Vol. 25 No. 3. https://doi.org/10.1108/jbs.2004.28825cae.003

How much social good is enough?

Andrew PharoahHead of Corporate Affairs Services at Hill & Knowlton, London (www.hillandknowlton.co.uk).

What Matters Most – Business, Social Responsibility and the End of the Era of Greed

Jeffrey Hollender and Stephen FenichellPublished by Basic Books

Corporate social responsibility (CSR) is now very much part of the corporate Zeitgeist. In fact, a survey published earlier this year by the World Economic Forum showed that over 70 percent of CEOs believe that mainstream investors will have an increased interest in corporate citizenship issues. When the investors are watching, we can be fairly the C-suite and the board will be taking serious interest.

Relatively few business people are now prepared to argue publicly that business does not have a responsibility to society beyond that of being economically successful. The debate now largely rests where upon a continuum of responsibility business should sit. This is a heated debate as was ably demonstrated by Christian Aid's recent counterblast that CSR was a completely inadequate response to the sometimes devastating impact that multinational companies can have in an ever more globalized world.

In such a climate, What Matters Most is timely. In the preface, Hollender and Fenichell make bold claims for what CSR can bring. It is not just about ameliorating the worst impacts of business on society but "a way of developing new markets, positioning products, gaining new customers, attracting the most talented workforce, building strong and lasting relationships with consumers, and building strong brands for a new century". What follows is a highly readable (albeit US-centric) history of social responsibility, brought to life with a fascinating series of case studies looking at companies such as HP, McDonalds, Starbucks, Nike, Chiquita, Shell and Johnson & Johnson. This is not a dry academic study but an engaging book written from deeply held beliefs. The authors document the changes taking place in the way that many multinationals operate, changes that a decade earlier would have seemed highly improbable.

While the changes are clear, the motivation behind them is less so. I suspect that for many of the executives concerned, CSR is rather more about corporate risk reduction than a totally new approach to business. Today's companies are living in an age of much greater accountability, where transparency and responsibility are expected. In such a time, when the business pages seem almost on a daily basis to be littered with the names of companies that failed to live up to expectations, it is wise to have an insurance policy for your reputation. And for an international or global brand with a large sourcing footprint, taking CSR seriously is almost a cost of doing business. While it cannot prevent damage to your corporate reputation, it can help you build up your "emotional capital" with stakeholders and make reputation recovery more likely. If one were being harsh, one could ascribe most of the changes brought in by most of the companies featured in the book to this kind of thinking or as a response to a crisis they were already facing.

But do the motives matter? This is at the heart of one of the major pressures in the CSR movement. For some, CSR is filling the gap left by a decline in political and religious convictions, and for them motives do matter. What's more, many are after a very different economic system than the one that allowed some of the companies highlighted to prosper.

The other tensions, which the book does explore, are those between localism and globalism and niche against mainstream. We read of the soul searching when the ethically-sound niche business gets bought by the global brand. Are values being "sold-out" or can more change be delivered to a wider group of consumers offered a better option?

The latter determine whether CSR can be for all, as demonstrated by a case study on McDonald's that offered perhaps too harsh a commentary on the company's efforts. If CSR is so constructed that global brands cannot meet its standards, then I know what I think will prevail.

What Matters Most implicitly confirms the fundamental importance of reputation and the need for companies to measure and manage it. It also shows what some of the world's leading companies are doing to make a difference. It highlights the importance of values, transparency – "the disinfectant of sunlight" – accountability, sustainability and responsibility. However, I fear it falls a little short of fully living up to the objectives its authors set for it.

The business case for CSR is becoming clearer, but a great deal more needs to be done to align company CSR policies with business strategies. If CSR is to become completely ingrained into corporate life, then it needs to be as fundamental to business success as new product development, branding, sales and marketing – and assessed, managed and invested in with similar discipline.