20 Apr 2012Working Paper Summaries

Why Every Company Needs a CSR Strategy and How to Build It

by Kash Rangan, Lisa A. Chase and Sohel Karim

Despite certain criticisms, more and more companies in the world practice some form of corporate social responsibility. This paper offers a pragmatic alternative framework for CSR with a view towards developing its practice in an evolutionary way. The authors' extensive experience working with CSR practitioners convinces them that exhorting companies to hone their CSR practice under a shared value framework does not reflect the reality for a majority of businesses. CSR executives oversee a variety of social initiatives that may or may not directly contribute to a company's business goals. The role of an executive is to achieve the difficult task of reconciling the various programs, quantifying their benefits, or at least sketching a logical connection to the business, and securing the support of his or her business line counterparts. This role, when performed well, would lead to the development of a CSR strategy for the company. Key concepts include:

Ideally, well-managed CSR creates social and environmental value, while supporting a company's business objectives and reducing operating costs, and enhancing relationships with key stakeholders and customers.
There is no one-size-fits-all CSR model. Individual companies typically engage in a variety of programs motivated by a wide range of perspectives and corporate protagonists.
In current practice, the management of philanthropic initiatives happens in what the authors label as Theatre 1; supply chain and cause marketing initiatives happen in Theatre 2; and transformative ecosystem initiatives occur in Theatre 3. These different initiatives are typically managed at different management levels, and some are staff functions and others line functions, resulting in a messy state of affairs. Gaining a unified vision is a central challenge of coordinating CSR efforts in all three theatres.
In addition to empowering CSR executives to practice strategic initiatives, strong leadership and support for CSR initiatives at the top levels of executive management is critical.
The strategic role of a Corporate Responsibility Officer needs to be established as an independent full-time position having access to the CEO and having input to the development of the company's business strategy.

Author Abstract

The authors argue for a strategic and pragmatic, rather than ideological, approach to Corporate Social Responsibility (CSR). They assert that, despite criticisms of and debate about the value of CSR initiatives to society and to corporate profitability every company needs a CSR strategy. Using a "three theatre" CSR framework, the authors demonstrate why the question for corporations is not whether to engage in CSR, but why they need to develop CSR strategies that both enhance CSR practice within each theatre and coordinate the independent efforts from across the three theatres. The authors claim that their perspective is a departure from the Shared Value framework, in that they embrace the inherent value of corporate philanthropy (theatre 1) on one end, as well as transformational business models with potentially limited short-term financial returns at the other (theatre 3). Furthermore, the authors seek an end to the fruitless debate about CSR definition and instead focus on providing pragmatic guidance for corporations to significantly improve their social and environmental contribution through a strategic process of continuous CSR auditing, editing and development.