As we finish the season of giving and head into the new year, perhaps it is time for the business world to consider its own commitments to society and take so-called corporate social responsibility (CSR) more seriously.
The Arab world has jumped on the CSR bandwagon in recent years, with countless conferences, summits and publications being dedicated to the topic. Though it is an omnipresent acronym, reflecting on it one sees that CSR sometimes fails to address important concerns. Indeed, closer scrutiny of such schemes leaves one with questions over how sincere companies are in their desire to effect change and how to distinguish between genuine CSR and mere public relations.
A preliminary glance at the global CSR track record makes for a grim prognosis. It is nothing short of laughable to think that both Enron and Lehman Brothers had CSR programs, proclaiming themselves to be deeply committed to issues ranging from social equity to climate change. Unfortunately, this tendency to advertise one’s efforts far more than actually engaging in meaningful work still exists today. For instance in 2011, Target, one of the largest corporations in the United States, made a whopping $69.87 billion income. In that same year, it dedicated $107.8 million to CSR activities, the equivalent of 0.15 percent of total revenues. This goes to show how little priority CSR is given still, even among the largest of global corporations, which could set examples to be followed.
But that does not go to say that real, impactful programs do not also exist. Examples include global initiatives to raise nutrition, health and wellness awareness among school children, bids to curb energy wastage and promote sustainability by adopting production processes with better efficiency and the sponsoring of numerous foundations to eradicate different diseases through research.
Going back to facts and figures, and regardless of how they compare, one question still remains: does the amount spent on CSR yield the desired return on investment, in terms of bettering societies while increasing the brand equity of a given company? The answer is a resounding “no”.
Communication Is Key
CSR is undoubtedly on the rise in the Middle East. In Lebanon, for instance, private sector leaders are very active on this front. Who hasn’t noticed all the initiatives the banking sector has been launching recently? From youth outreach programs, to ‘green’ campaigns, fitness and public health initiatives, road safety, arts and culture funds, charity event sponsorships — the list goes on.
Having said this, a close look at the regional business landscape today tells us that CSR should not be taken at face value; if a company claims to engage in “socially responsible” work it does not mean that this claim was earned or based on actual action. Unfortunately, the lion’s share of CSR initiatives today still falls under the category of “fake zeal”. Exacerbating the problem further still is the reality that the public is most often incapable of differentiating between those initiatives and programs that are genuine and those that are not.
Before anything else can be done, public awareness levels need to increase to a point where people are able to distinguish between those who are sincerely committed to CSR and those simply laundering their image.
The most beneficial CSR direction at this point in time, therefore, is to enter into a phase of intensive awareness building. This would entail the dedication of CSR budgets over the coming few years to this very cause. It would also mean the creation of far-reaching awareness campaigns, the setting of CSR standards and objectives per sector and the establishment of Key Performance Indicators to allow individuals to concretely measure the performance of corporations. It would also mean requiring companies to publish annual, publicly available CSR reports that answer to international best practices.
Why is awareness so important? The answer is simple: the way things currently are, CSR — for the most part — is a lose/lose situation.
Currently corporations that claim to be ‘socially responsible’ are often not perceived as credible, with cynical members of the public immediately dismissing or brushing aside their efforts. On the flip-side, citizens who do believe in the sincerity of CSR have a tendency to not be demanding enough and fail to hold corporations accountable for their promises.
Either way, the result is negative all around. Businesses are not reaping the desired good will from their consumer bases, nor are they effecting real change because the vast majority of initiatives remain superficial or are met with considerable resistance even when they have actual substance to them.
Not only is this situation sub-optimal, it can also be seriously damaging to a business as CSR that is perceived as insincere can gravely hurt a company’s brand. In a recent survey conducted on the matter, 71 percent of respondents said they would stop buying a product if a company claimed to be environmental friendly but turned out not to be — so-called ‘greenwashing’ — or they were misled by a company claiming to be green, and of that 71 percent more than 30 percent would outright boycott the company that made the false claims. Fake CSR can have dire consequences for businesses once consumers find out.
Making it a Win/Win
The good news is that this problem does not come without a solution, and awareness lies at its heart. If awareness levels increase and the average consumer becomes equipped with the tools to distinguish between what’s real and what’s not, companies who engage in genuine initiatives will enjoy new-found levels of recognition and credibility.
Along with cynics being converted, proponents of CSR, armed with higher awareness, will hold corporations to a higher standard and become increasingly demanding of them in the future. What’s more, all of these stated effects can only but snowball and multiply, given the nature of communication today and consumers’ tendency to share information through online forums and platforms at unprecedented speed.
It is a widely accepted fact that brand equity constitutes a significant portion of a brand’s value, even if such value is not easily quantifiable. There is no better way to increase such equity than by engaging in CSR that makes a difference and simultaneously resonates with customers.
In light of all this, the real responsibility that companies have now is to strive to alter the status quo and transform the situation into a win/win, effecting real, tangible change in the process. CSR isn’t a buzzword or temporary staple of business jargon — it is here to stay.
Attaining a threshold level of CSR education is a first and necessary step, but it is just the beginning. The fact of the matter is that as long as efforts remain scattered and fragmented, they will not achieve optimal results on the desired scale.