In my last article, I wrote about the evolution of Corporate Social Responsibility (CSR), promising that in this one I would delve into the latest trends in CSR and how it relates to ESG (the Environmental, Social and Governance dimensions) and the SDGs (the Sustainable Development Goals).
For my guidance, I turned again to Michael Hopkins, whose core area this has been for 20 years and who has written several books on the subject, including his 2016 one, aptly named CSR & Sustainability: From the Margins to the Mainstream. His most recent one, CSR and Sustainability – The Big Issues of the Day, was published this year, and it is from here that I lay out his model for applying what he describes as a “systems approach” to CSR.
Through such discipline, Prof Hopkins sees organisations not just viewing the CSR activity as inhabiting some corner in a department, but evolving as a high-level integrated component of the overall strategy, with active board engagement.
It must be well-managed so as to ensure profitable sustainability, he insists, and it should be pursued without compromising those profits. It is a question of how profits are generated, he clarifies, not allowing them to suffer as a result of “doing good”.
For anything to be well managed it must be well measured, as we all know.
But defining Key Performance Indicators for CSR initiatives is not a straightforward task – particularly given the requirement to have them be associated with the relevant SDGs, given their broadly defined aspirations.
It’s a challenge to assess the impact of any goal that cannot be easily measured in terms of quantifiable scale such as shillings or miles.
And this, more so, as of course must happen, if one follows the path to the ultimate desired impact. Bearing in mind, too, that having visualised that impact a new issue arises: to what extent can one attribute it to the initiative in question?
Little wonder that only a few organisations are anywhere near rigorous in laying out KPIs in the CSR domain.
The consequence, however, is that when for instance they seek capital, potential investors will not be impressed.
The “business case” must be spelt out, just as it must for any other aspect of the organisation, and of course, we’re talking about the long-term case. After all, that’s what sustainability is all about.
These days too all this must integrate with the whole ESG ecosystem.
And a good place to start is by drawing up a stakeholder map bearing in mind that the essence is to “treat all key stakeholders responsibly”. So, who are they? Which ones are key, in their influence on our organisation, and in ours on them?
Having identified them, the next stage is to invite them into dialogue, so a clear, trusting and mutually beneficial relationship is developed between them and you.
Such dialogue must involve a wide range of contributors from within – way beyond just someone with a fancy title like Chief Sustainability Officer.
The next step is formulating the CSR strategy, integrated into the overall organisational one.
This lays out the purpose, the programmes and the indicators; the budgets and the benefits; the systems and the performance management; and the reporting discipline.
A good example of the positive stakeholder impact of CSR is in the area of staff engagement, where the consequence of doing well by doing good is that people of high competence and character are attracted to join you and stay with you.
Here as elsewhere, one must define indicators that assess the impact of CSR on such talent attraction and retention.
Time must be invested in all of this, and more than on a one-off basis. But not everyone is a Safaricom or a KCB or a Diageo, so we must not be over-ambitious either.
The idea is to be uplifted by one’s efforts to make a sustainable assessable difference in this world, knowing that today organisations are being judged not merely by the extent to which they protect shareholder interests but the broader stakeholder ones, too.
A final point: Prof Hopkins is a strong advocate for CSR to be practised not just by for-profits but also NGOs and the government.
Why should they feel morally superior to commercial entities if they too do not treat all stakeholders fairly?