Social Enterprise

Sparks Fly on E Street: Radical Change in the Future of CSR

Business has an important role to play in social change, but not through corporate social responsibility.

“I saw my rock 'n' roll past flash before my eyes. And I saw something else: I saw rock and roll future, and its name is Bruce Springsteen. And on a night when I needed to feel young, he made me feel like I was hearing music for the very first time.”

That’s music critic, manager, and record producer Jon Landau’s description of seeing Bruce Springsteen at the Harvard Square Theater on May 9, 1974. Over the last year, I had my own epiphany and thought a lot about Landau’s transformational experience with the Boss. My awakening wasn't as sudden, but it came at a time when I was hungry for a renewed sense of purpose in an area in which I’ve been immersed for the past 15 years: the intersection of business and social change.

Aligning business with social issues has always been a challenge. This is because most corporations come to social change reluctantly, as a reaction to a growing expectation among the public that businesses ought to “give back” in some way. Not surprisingly, the resources businesses allocate to this area are chronically inadequate for the purpose, and it’s been more of an exercise in optics rather than anything material and measurable. The objective seems to be: Do the minimum work necessary to get employees, customers, and the public to see you in the right light.

The challenge is also reflected in the inability of the business sector to consistently describe what happens in this area. Corporate social responsibility (CSR), corporate citizenship, corporate responsibility, sustainability, cause-related marketing, and shared value all describe the relationship between business and social change. This inability to agree on the most basic description indicates a lack of clarity and commitment that simply doesn’t exist with other business priorities such as marketing, sales, human resources, or finance.

Finally, while businesses have done many socially minded things (well-known examples include TOMS’ creating a new mass retail model to address social problems in developing countries, Unilever revolutionizing business sustainability, and Starbucks prioritizing hiring vulnerable youth and participating in the 100,000 Opportunities initiative, there is no shortage of unethical practices. I’ve dubbed 2015 as the year of corporate social irresponsibility. Volkswagen lied. Amazon conducted an experiment to see how far it could push white-collar workers to achieve its business objectives. Grocery stores sold shrimp peeled by slave labor in Thailand.

Besides specific incidents of good and bad corporate behavior, on a deeper level I sense that businesses don’t believe corporate social responsibility is worth the effort. As a result, much of the work that companies put into social efforts is smoke and mirrors—not substance. I also sense that the small industry of people inside and outside businesses that work in this area have become very nervous, and are thinking, “It was lots of fun while it lasted, folks, but the secret is about to get out, and then it’s back to business like everyone else.”

Despite the fact that CSR—or whatever a business chooses to call it—has become ubiquitous and seems ripe for improvement in all kinds of ways, making real headway has become next to impossible. I’ve spent years writing about business and social change, but last year I found I didn’t have much to say anymore. It felt like CSR was rock 'n' roll past.

Against this rather bleak picture, however, I actually see a silver lining. There are more opportunities than ever to engage corporations in social change—but not until we stop trying to improve an approach that businesses don’t really want in the first place. My vision of the future is built on three principles.  

First, those working at the intersection of business and social good need to take a hard look at whether their current investments in social change are yielding real impact and be empowered to make change as required. Businesses should focus investments on helping solve a specific social problem, maintain aspects of current programs that are delivering value, and reallocate all other investments.

This is also an opportunity to shift from CSR-based investments to innovative, disruptive and, technology-based solutions. For example, a bank could leverage its IT expertise to establish a crowdfunding platform that helps social entrepreneurs, nonprofits, and community groups raise funds. Pharmaceutical companies, many of which have agricultural divisions, could help hospitals provide healthier food to patients by operating their own farms. (This idea isn’t so far fetched. St. Luke’s University Hospital operates a hospital farm on its Anderson campus in Easton, Pennsylvania.)  

Second, more new social enterprises should offer businesses the opportunity to solve social problems in a way that is indivisible with their business objectives. For example, Impakt, the B Corp that I lead in Toronto, recently developed HireUp, the first national job portal dedicated to ending youth homelessness. Developed with the support of The Home Depot Canada Foundation and Workopolis, HireUp helps businesses meet recruiting objectives by hiring young people who have experienced homelessness and are now prepared to join the workforce.

It’s also important to recognize that any business contributing to positive social or environmental change directly through its business activities doesn’t need to be involved in CSR at all. B Corps and other social enterprises are good examples of businesses that are inherently “responsible.”

Finally, while charitable organizations and nonprofits play an important part in helping to solve social issues, social enterprises are also extremely powerful agents of social change. However, despite the growing importance of these organizations, companies make CSR partnerships almost exclusively with charities and nonprofits. This must change. We must base corporate social investment decisions on outcomes, not on tax status. HireUp is a good example of the future in this area. It is not a charity, but was developed with the support of businesses and will operate as a sustainable social enterprise.

For me, moving away from CSR has been rewarding to a degree that makes much of the other work I’ve done seem trivial. However, like most extraordinary things in life, this has come at a very high cost. I significantly underestimated the time and money that was needed to develop HireUp, we lost most of our bread and butter consulting business, and we’re still working out how to operationalize and scale as a social enterprise. But I’ve seen a new future of how to help businesses solve social problems and going back to CSR past just isn’t an option.

The first words that Landau would have heard from Springsteen in 1974 were “Sparks fly on E Street.” Today, sparks are flying in the world of CSR, and the future is already looking very different. It seems somehow fitting to me that Bruce Springsteen and the E Street Band are starting a new tour this month.

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COMMENTS

  • BY Paul Klein

    ON January 14, 2016 07:06 PM

    It’s a privilege to share this new article with the SSIR community - I look forward to reading and responding to your comments.

  • BY Unmesh Sheth

    ON January 14, 2016 10:04 PM

    Paul, This is a wonderful article.  I lead social impact measurement platform - SoPact (http://sopact.com).  So, impact measurement is obviously my passion.  In fact, I built this platform, not as a business reason but to first solve major issue of impact evidence building - improve better collaboration with deep impact evidence between funders and program agencies, grantees and investees.

    For longest period, I am interested in a need for our platform in CSR world.  So your article helps in understanding the current state of CSR. However, what I am curious is understanding trends with some data or evidence.  I would appreciate if you could entertain my question below!

    From the tone of your article, it seems that what you are describing is that your vision (or more like a wishlist).  Though you have given few examples of changing behavior of CSR -  what is an evidence (or trend) do you see with CSR towards hight impact CSR? 

    Let me put this question in a different way— Do you see any evidence where CSR are trying to change strategic approach towards outcome?  Is this in a concept phase, proving phase, startup phase or beyond that!  Do these high-impact CSR (not sure you have statistics on them) really have a budget to move the needle on business like yours?  For those high-impact CSR, what is their budget divided by total profit ratio (average)?

    Thanks in advance.
    Unmesh Sheth, Founder SoPact (http://SoPact.com)

  • BY Unmesh Sheth

    ON January 14, 2016 10:11 PM

    Clarification - last sentence:  Total Budget of CSR divided by corporate profit.  Just to give you a context—In India, there is a new law of 2% CSR, which is based on corporate profit.  Not sure the effectiveness of such a mandated CSR laws vs. CSR is the US. But what I am trying to determine is a total commitment of a budget in the western countries (US, Canada like) corporate run CSRs.

  • BY Paul Klein

    ON January 15, 2016 03:18 AM

    Hello Unmesh: Thanks for your thoughtful comment - I really appreciate it. Your question isn’t easy to answer but here are a few thoughts:
    As you know, the accuracy and validity of measurement diminishes as the scope of what’s being measured widens. So, as an example it may be possible to accurately measure the impact of CSR investments in improved educational outcomes in a specific school district over a given period of time. However, measure the value or impact of a large corporation’s 2% investment in many social and environmental aspect of CSR across India is impossible. It could argued (but not proven) that the wider the focus the less the social change.
    I don’t have a problem with a mandated law but this one (as I understand it) suffers from the same issue mentioned above, it isn’t specific enough. Perhaps leaders in India could go further to suggest that the 2% CSR investments should be focused on specific issues depending on where the company was located, what the social/environmental/employee/government priorities are.
    Just thoughts - hope these are helpful! Thanks again

  • BY Unmesh Sheth

    ON January 15, 2016 09:28 AM

    Dear Paul,

    You reflection/analysis is quite useful. I should have asked this question in point by point manner. While, you gave me a meaningful answer with India context, can you give me a perspective on US/Canada/Europe based CSRs. 

    You mentioned that different CSRs have different context or roles = Corporate social responsibility (CSR), corporate citizenship, corporate responsibility, sustainability, cause-related marketing, and shared value all describe the relationship between business and social change.

    Do you see strong evidence that CSRs have started to think about value-based investing - even if it is a just early stage?

    For those who are shifting strategy towards value-based investing do they have meaningful budgets allocated?

    Do you any see evidence of use towards measurement & reporting process both or not just reporting?

    Thanks,
    Unmesh Sheth, Founder, SoPact (http://sopact.com)

  • BY John Paluszek/Business In Society

    ON January 16, 2016 06:35 AM

    The very evolution of corporate impact on society that you wisely recommend is well underway. We are well into the stage in which traditional business objectives and social progress are being integrated into business missions and strategic plans. In many companies “CSR departments” are now increasingly stewards – not owners – of this evolution. Perhaps most illustrative is the movement to business integrated reporting (integrated thinking) championed by The International Integrated Reporting Council http://www.TheIIRC.org  . There are many examples of this new business model in organizations such as the United Nations Global Compact. Too, B companies such as yours and the overall “Shared Values” community illustrate the creativity of many leaders of large and small businesses to achieve the integrated business-in-society (aka CSR/Sustainable Development etc.) mission. Your prescient, progressive comments may well stimulate the velocity of this evolution. Critically important, because society surely needs the powerful contribution business can make in its own interest – because increasingly, many stakeholders want it —and for the common good.

  • BY Paul Klein

    ON January 16, 2016 09:15 AM

    Thanks so for the comment John. You have a such an important voice in this area and are also part of this important evolution.

  • BY Colin Tincknell

    ON January 17, 2016 11:59 PM

    Thanks for sharing Paul, a very thought provoking article. It will be interesting watching what companies do and being involved in this evolution.

  • Nirbhay Lumde's avatar

    BY Nirbhay Lumde

    ON January 19, 2016 08:53 PM

    I am a CSR practitioner in India. I appreciate your thought process and various perspectives on CSR and social change. In the context of India, CSR would certainly have some impact. It is true early to have any impact. I am sure there’s more money towards some of the critical social parameters.

  • BY Paul Klein

    ON January 20, 2016 03:25 AM

    Thanks Colin - I’m actually more enthusiastic than ever about the role of business in social change.

  • Rakhi Mehra's avatar

    BY Rakhi Mehra

    ON February 22, 2016 05:56 AM

    Hi Paul,
    I can sense (and share) your disillusionment in the ways companies understand and engage with ‘CSR’ and the double standards in the practice. 
    If I have grasped this correctly, the radical change you refer to for businesses is to give CSR investments priority and view it more strategically. You see new opportunities for companies to bring innovative processes (technology) and partnerships (b-corps, social enterprises) into the ambit. These activities may not or may not benefit the company directly however have the potential to make an intended positive impact.  I agree on the approach to open it up and widen the players. This aspect of CSR strategy has been much discussed (The truth about CSR, Prof Kash Ranjan, Harvard Business Review 2015).

    However I am not sure it would still solve the problem for us interested in the role of businesses in society - practices need to change both at Amazon or Volkswagen even if the culture is resistant to it. 

    The radical change you propose maybe only in the definition and practice you are arguing for- to take the social, environmental and governance ‘responsibility’ out of the CSR discourse where it is proving to be a futile exercise.
    Perhaps what you are implicitly suggesting is for another domain to take it on- CSR tried and failed and it needs to be tackled somewhere! Does that agenda now lie with the folks in Corporate Sustainability?

    Rakhi
    co-founder mHS City Labs (social enterprise)
    Research Affiliate, Golden for Sustainability, University of Bocconi, Milan

  • BY Paul Klein

    ON February 22, 2016 01:30 PM

    Hi Rakhi,
    Thanks so much for taking the time to comment.  I agree that CSR needs to be tackled differently and that part of the problem is that the CSR folks don’t have the mandate (or skill set) to turn what is now largely an expense into a profit center. In this sense, your suggestion of corporate sustainability owning this agenda is a very good one. Beyond this, it would be really interesting to see how different CSR would be if you had this area run by people with finance or operations expertise. The dialogue has to evolve from asking if this is something that we would donate to/support to asking if this is something that we would invest in.
    Thanks again
    Paul

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