Responsibility & Recession

What are the major issues CSR practitioners are thinking about as they predict the impact of the recession on this field? What kinds of social responsibility programs are companies most likely to maintain in the face of financial pressures?

As you can probably guess, business school students talk a lot about the current economic situation. It comes up in the classroom, in speeches by visiting business leaders, and certainly in conversations about the job search. Somehow, though, I don't think I fully grasped how big this is until I was in New York last week for the Conference Board's 2009 Leadership Conference on Global Corporate Citizenship.

In the city where so much of this started, the financial crisis dominated conversations of all sorts. At dinner with a friend who works in investment banking, we talked about how many of her coworkers have been laid off recently. Over lunch with a former colleague, we discussed the impact on the nonprofit sector. At the conference itself, as I mentioned in my post on Thursday, the impact of the economic crisis on corporate social responsibility was a major theme.

Over the course of the next few months, I plan to explore the implications of the current economy on corporate social responsibility, for the purpose of understanding what we can expect in this sector over the next few years. I also think that studying how companies react to these trying circumstances helps us to understand the role that CSR plays within their organizations - for instance, are these programs a "nice to have" that can easily be cut back, or are they truly integrated into the business model?

Attending the Leadership Conference on Global Corporate Citizenship was a very helpful way of diving into this big question. The conference was attended largely by high-level CSR practitioners who spend their time dealing with these issues, so I found it illuminating to hear what they're thinking.

The major perspectives that I heard, on the question of how the economic crisis will impact CSR, included the following:

• We should indeed expect to see some "CSR attrition"
• With so many people negatively impacted by the recession, CSR is more necessary now than ever
• The political climate and President Obama's message of responsibility make this the time to focus on CSR
• If CSR is actually part of a company's culture, its employees will find a way to keep going, despite the external context
• Pulling back from CSR initiatives during bad times destroys trust
• The recession will provide an opportunity to differentiate between companies that truly believe in CSR and those who "pay lip service" or are just in it for the good PR - and this revelation may have long-term consequences
  

I find this last notion particularly intriguing, because I don't agree with the apparent underlying assumptions. There's certainly something satisfying about the logic - the idea that a company would capitalize on a social problem to generate good press, only to turn its back on the cause just when its involvement is needed most, does indeed feel a bit sleazy. Ultimately, though, do the company's motivations for engaging in CSR truly matter?

Here's what I want to see in a CSR initiative - I want to see a program that's embedded in the business. I want to see a program that really and truly is win-win, so that it doesn't rely on good intentions for its continued survival. Maybe the company in question has designed an environmental program that really does decrease costs, for example, or maybe it has engaged with suppliers in developing economies on programs that both improve the quality of the product and the suppliers' quality of life.

Sure, it's great if a business leader has a sense of responsibility to the world around him, if she believes that improving lives through better business practices is simply the right thing to do. I can imagine that such a leader could come up with some pretty amazing programs. But when the next CEO comes along (or maybe the next recession), which programs are most likely to be preserved, the ones that the previous leader "truly believed in" or the ones with a clear benefit to the company?

The recession might indeed provide an opportunity to differentiate between companies that truly believe in CSR and those who are in it for the business benefit - because by my logic, it's the latter group that will choose to continue their programs. Of course, these motivations aren't mutually exclusive, and "good PR", while certainly a business benefit, may be less compelling than benefits that can be more clearly tied to the bottom line. Furthermore, this assumes a basic set of ethics and a legal framework that do not rely on business benefit (i.e., prohibitions on child labor should not have to rely on a business case for why they make sense economically).

I hope I don't sound cynical, because the overall message I got from the conference, on the issue of CSR and the economy, was definitely optimistic. Generally, the participants seemed to see a strong future for CSR, not just in spite of the economy, but perhaps even because of it. This sentiment was best captured in closing remarks by David Vidal, Research Director, Global Corporate Citizenship at the Conference Board. By using this recession as an impetus for identifying future opportunities and redefining the field's objectives, he told us, "Let's not waste this crisis."