CSR 2.0: From defensive to systemic corporate sustainability and responsibility

I have found it
useful to view the evolution of business responsibility in terms of five
overlapping economic periods – the Ages of Greed, Philanthropy,
Misrepresentation, Management and Responsibility – each of which typically
manifests a different stage of CSR, namely: defensive, charitable, promotional,
strategic and systemic CSR.

My contention is that
companies tend to move through these ages and stages (although they may have
activities in several ages and stages at once), and that we should be
encouraging business to make the transition to systemic CSR in the dawning Age
of Responsibility. If companies remain stuck in any of the first four stages, I
don”t believe we will turn the tide on the environmental, social and ethical
crises that we face. Simply put, CSR will continue to fail.

The Ages and Stages of CSR

The Age of Greed is characterized by defensive CSR,
in which all corporate sustainability and responsibility practices – which
are typically limited – are undertaken only if and when it can be shown that
shareholder value will be protected as a result. Hence, employee volunteer
programmes (which show evidence of improved staff motivation, commitment and productivity)
are not uncommon, nor are expenditures (for example in pollution controls)
which are seen to fend off regulation or avoid fines and penalties.

Charitable CSR in the Age of Philanthropy is
where a company supports various social and environmental causes through
donations and sponsorships, typically administered through a foundation, trust
or chairman”s fund, and aimed at empowering community groups or civil society
organizations.

Promotional CSR in the Age of Misdirection is
what happens when corporate sustainability and responsibility is seen mainly as
a public relations opportunity to enhance the brand, image and reputation of
the company. Promotional CSR may draw on the practices of charitable and
strategic CSR, and turn them into PR spin, which is often characterized as
“greenwash”. 

Strategic CSR, emerging from the Age of Management,
means relating CSR activities to the company”s core business (e.g. Coca-Cola
and water management), often through adherence to CSR codes and implementation
of social and environmental management systems, which typically involve cycles
of CSR policy development, goal and target setting, programme implementation,
auditing and reporting.

Systemic CSR in the Age of Responsibility focusses its
activities on identifying and tackling the root causes of our present
unsustainability and irresponsibility, typically through innovating business
models, revolutionizing their processes, products and services, and lobbying
for progressive national and international policies.

Hence, while strategic CSR is focussed at the micro
level – supporting social or environmental issues that happen to align with its
strategy (but without necessarily changing that strategy) – systemic CSR
focuses on understanding the interconnections of the macro-level system –
society and ecosystems – and changing its strategy to optimize the outcomes for
this larger human and ecological system. 

Systemic CSR – which I also refer to as CSR 2.0 – is
based on five principles: creativity, scalability, responsiveness, glocality
and circularity. These hold the key to making change happen, at a societal,
organizational and individual level, and ensuring that we can all make a
difference.

Three Curses of CSR 1.0 and Five Principles of CSR 2.0

Despite its seemingly impressive steady march of
progress in the past decades, CSR has failed. Furthermore, we are witnessing
the demise of CSR, which will continue until its natural death, unless it is
reborn and rejuvenated.

CSR has undoubtedly had many positive impacts, for
communities and the environment. Yet, its success or failure should be judged
in the context of the total impacts of business on society and the planet.
Viewed this way, on virtually every measure of social, ecological and ethical
performance we have available, the negative impacts of business have been an
unmitigated disaster, which CSR has completely failed to avert or even
substantially moderate.

Why has CSR failed so spectacularly to address the
very issues it claims to be most concerned about?This comes down to three
factors – the Triple Curse of Modern CSR, if you like:

1. Incremental CSR: The incremental approach of CSR,
while replete with evidence of micro-scale, gradual improvements, has
completely and utterly failed to make any impact on the massive sustainability
crises that we face, many of which are getting worse at a pace that far
outstrips any futile CSR-led attempts at amelioration.

2. Peripheral CSR: CSR is, at best, a peripheral
function in most companies. There may be a CSR manager, a CSR department even,
a CSR report and a public commitment to any number of CSR codes and standards.
But these do little to change the underlying growth-and-consumption model that
fuels environmental degradation and social disruption.

3. Uneconomic CSR: The “inconvenient truth” is that
CSR sometimes pays, in specific circumstances, but more often does not. Of
course there are low-hanging fruit – like eco-efficiencies around waste and
energy – but most of the hard-core CSR changes that are needed require
strategic change and massive investment, which the markets don”t support.

To get beyond these curses, we need a revolution that
will, if successful, change the way we talk about and practice CSR and,
ultimately, the way we do business. I call this new approach, CSR 2.0, where
CSR stands for Corporate Sustainability and Responsibility. There are five
principles that make up the DNA of CSR 2.0:

1. Creativity (C): The problem with the current
obsession with CSR codes and standards (including the new ISO 26000 standard)
is that it encourages a tick-box approach to CSR. But our social and
environmental problems are complex and intractable. They need creative
solutions, like Free-play”s wind-up technology or Vodafone”s M-Pesa money
transfer scheme.

2. Scalability (S): The CSR literature is liberally
sprinkled with charming case studies of truly responsible and sustainable
projects. The problem is that so few of them ever go to scale. We need more
examples like Wal-Mart “choice editing” by converting to organic cotton, Tata
creating the affordable eco-efficient Nano car, or Muhammad Yunus”s Grameen
banking model.

3. Responsiveness (R): More cross-sector partnerships
and stakeholder-driven approaches are needed at every level, as well as more
uncomfortable, transformative responsiveness, which questions whether
particular industries, or the business model itself, are part of the solution
or part of the problem. A good example is the Corporate Leaders Group on
Climate Change.

4. Glocality (2): This means “think global, act
local”. In a complex, interconnected, globalizing world, companies (and their
critics) will have to become far more sophisticated in combining international
norms with local contexts, finding local solutions that are culturally
appropriate, without forsaking universal principles. We are moving from an
“either-or”, one-size-fits-all world to a “both-and”, strength-in-diversity
world.

5. Circularity (0): Our global economic and commercial
system is based on a fundamentally flawed design, which acts as if there are no
limits on resource consumption or waste disposal. Instead, we need a
cradle-to-cradle approach, closing the loop on production and designing
products and processes to be inherently “good”, rather than “less bad”, as Shaw
Carpets does.

Making a positive contribution to society is the
essence of CSR 2.0 – not just as a marginal afterthought, but as a way of doing
business. This is not about bailing out the Titanic with a teaspoon – which is
the current effect of CSR 1.0 – but turning the whole ship around. CSR 2.0 is
about designing and adopting an inherently sustainable and responsible business
model, supported by a reformed financial and economic system that makes
creating a better world the easiest, most natural and rewarding thing to do.

Article reference
Visser, W.
(2010) The Ages and Stages of CSR: From Defensive to Systemic Corporate
Sustainability and Responsibility, CSR Inspiration Series, No. 8.

Visser, W.
(2010) The Fall and Rise of CSR: The Three Curses of CSR 1.0 and the Five
Principles of CSR 2.0, CSR Inspiration Series, No. 7.

Part of the
CSR INSPIRATION Series
Copyright
Wayne Visser & CSR International 2010