Corporate responsibility or strategy?
Some scandals make us question the usefulness of corporate social responsibility (CSR) strategies, but should we dismiss these altogether or rather integrate it into the corporate strategy?
Volkswagen (VW) is under fire for rigging official car pollution tests, which enabled the company to hide the fact that their diesel cars produce pollution above the legal limit in the EU. Aside the clear ethical, environmental and legal implications that arise with this scandal, another problem emerges: the decrease in the public’s trust in corporate responsibility.
To some companies, corporate responsibility is just a façade. These organisations invest in charitable causes, develop social initiatives or launch environmental campaigns purely for the halo effect this work can create. VW missed the whole point about being a responsible business: it doesn’t relate to enhancing reputation (which it can do), or getting more sales by pretending to be something one’s not (and hence misleading its customers). Being responsible involves setting out to achieve three main aims:
Achieving a new(er) and stronger relationship with the company’s external stakeholders – be it your customers, supply chains or other;
Setting out commitments and actually believing in and delivering them;
Last but not least, it’s about doing the right thing for the right reasons – all in an objective, realistic and verifiable manner (through targets, auditing and strategy (re)evaluation).
Unfortunately, scandals such as VW’s open the door for sceptics to question the credibility of any company truly believing in fully integrating into society as a responsible “corporate citizen” as well as question the real value of CSR.
I believe the time has come to reclaim the true meaning of the “corporate social responsibility” tagline: with the right external and internal support, it is possible for businesses to become organisations that listen to their customers, build stronger relationships with the external world and address their core business operations, all with the aim of actively being an actor of broader society (and ultimately performing better financially).
The business case for a tailored CSR strategy has already been proven: increase in employee retention, efficiencies in the companies’ operations often resulting in higher quality products and/or reduced costs, sustainable growth and enhanced investor relations just to name a few.
Corporate responsibility will only be seen as part of the corporate strategy once organisations have understood that it’s not just about reputation. It relates rather to business choices (e.g. long-term plans, ‘material’ value vs economic value, ethical behaviour). It relates to the creation of a new moral “business as usual” in which the value of an organisation is not only recognised in the economic market but beyond it (such as the role of companies in coming up with innovative solutions to battle climate change or their role in communities). Once this is understood and integrated, and only then, we will be able to stop thinking on “corporate responsibility” terms, as its meaning will become inherent of the corporate strategy.
As for VW, its credibility as a green business is gone: the company’s facing legal action in several countries, and its former prizes as “Green Car of the Year” (won in 2009 and 2010) seem to confirm there’s been greenwashing. With levels of trust spiralling down, it will be hard for VW to rebuild stakeholder relationships. The company may do so by re-evaluating how it views CSR and by establishing a new set of company values that all employees (incl. senior management) buy into. On the environmental front, VW must deliver on its promises – as all organisations must – starting with consulting technical staff to set and deliver realistic environmental targets for its engines. Moreover, random audits along the supply chain worldwide will have to take place, and the results of these audits will have to be disclosed to the public along with provisory measures in case cars do not perform as expected. And this will be just the beginning.
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