March 31, 2009
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I was talking to a friend who held a position as a CSR (corporate social responsibility) manager, until last week. She was laid off due to budget cuts. What I found interesting was her attitude towards the matter; “of course CSR will go, why would they need it if they’re having cash flow problems?”. This isn’t the first time I came across this view on the relationship between CSR and budgets. In recent months, I have heard a number of business people including executives link the two proportionally. Why is the link so strong and proportional in people’s mind? Why has CSR become a luxury that corporations can do without at times of financial strife? Shouldn’t a company act responsibly towards its stakeholders irrespective of its financial standing?
The root of the problem is the gross misunderstanding of the term CSR. CSR suggests that corporations have a duty of care to ALL their stakeholders in ALL aspects of their business operations. Stakeholders include shareholders, employees, clients, partners, the community and the environment. CSR requires that a business account for and measure the actual and potential economic, social and environmental impact of its decisions.
CSR goes well beyond philanthropy and is more linked to corporate ethics, values and most importantly behavior. How a business conducts itself with its stakeholders determines the degree of its social responsibility. Furthermore, there is a difference between social responsibility and cause marketing. While CSR describes how a corporation demonstrates responsibility through the practice and policies that govern their production and service delivery, cause marketing leverages a charitable brand to increase sales and support product positioning. Successful cause marketing is done on an ongoing basis through a charity that is strategically aligned with a company’s products or consumer interests.
The proportional association the market has placed between budgets and CSR leads me to conclude that CSR is confused with Cause Marketing. Clearly, if the financial situation marks an economic slowdown, and revenue declines, then marketing budgets can be affected proportionally. A decline in revenue or investment should not absolve corporations from caring for stakeholders. Care does not cost money, but requires thought, planning and commitment. How reckless would we find parents who abandon their children during economic hardship? And how admirable do we find communities that bind together and support each other during times of crisis? The same logic applies to corporations. During hardship, social responsibility becomes indispensable!