What’s in a name?
Ten years ago we organized the first Asian Forum for Corporate Social Responsibility in Manila. Since then AFCSR has been held in most of the major cities in Southeast Asia: Bangkok, Kuala Lumpur, Jakarta, Ho Chi Minh, Singapore.
At the start business people kept asking us what CSR was all about. Today companies cannot stop talking about their CSR programs or projects or about the importance of CSR to a company. But one wonders if they are referring to the same thing when they say CSR because of the multitude of terms that are being used: corporate giving, philanthropy or strategic philanthropy, social sponsoring, corporate citizenship, corporate community involvement, sustainability and of course corporate social responsibility.
Some writers like Lakin have done some work to try to distinguish between these terminologies. There is, of course, a historical background in the development of these terms. In the early 1960s, the prevailing social contract was understood as the government providing social goods. Business was not expected to do the same but was merely expected to obey laws and pay taxes. In addition companies contributed to social causes, especially in communities where they operated. They made donations to organizations, such as the Red Cross, the Cancer Society and the like, without expectation of any return to the company. These were often one time activities undertaken especially when profits were good. These are more appropriately termed as philanthropy and are today generally seen as part of corporate giving.
Philanthropic activities initially had no focus other than that the companies donated to causes that they or their managers and owners liked. When companies began looking for a return, usually a refutation benefit, they began to develop a focus for their corporate giving. This is now referred to as strategic philanthropy. Through this process, companies align their corporate giving to causes that relate to their core business. Food and drug companies, for example, tend to give to causes related to health and nutrition while IT companies support a lot of programs relating to children’s education.
In corporate giving and philanthropy, the focus and emphasis are on the giving. The reputation benefit to the company tends to be just a by-product. However, when there is a greater focus on the reputation return to the company, it is known as social sponsoring. According to Lakin, consumers care about a company’s and a brand’s ethics, and are increasingly interested in what is called the social brand dimension. Given this reality, he says, companies that prominently display their logos at sports events or big concerts think they can do the same in a social context. By sponsoring, they can associate their brand with “having a heart,” values and ethics.
In the latter 1990s a new social contract began to emerge. National governments were increasingly losing power and influence, and in 2000 a report on the top 200 corporations indicated that of the top 100 economies in the world, 51 were corporations and only 49 were nation states. Thus society began to expect companies to play a greater role as corporate citizens to solve social problems in relation to employment, health, safety, education, culture, poverty and the environment. This was further reiterated and formalized in the declaration of the Global Compact. The Business Council for Sustainable Development also took up and accepted this challenge.
Thus began the Corporate Community Involvement. Companies realized that it was not enough to give people fish but it was far better to teach them how to fish. This led to partnerships between business, government and NGOs to jointly develop solutions to community problems. The results were then communicated to the public to enhance corporate reputation.
One will note an increasing involvement on the part of companies from mere writing of checks to joint development of solutions to social problems; from little or no interest by companies to generate reputation benefit from these activities to a deliberate use of these activities to obtain business benefits out of them. Prior to this time, companies shied away from helping causes that related to their business lest they get accused of using these good deeds to promote their own products. It was seen as unethical to make donations and expect benefits out of it. Shareholders also saw these donations as a diminution of the resources available for dividends. Hence the sustainability of these programs was a concern.
This led to the development into what we now call Corporate Social Responsibility. The thrust is now to integrate these activities into the core business of the corporation. In this manner both society and the corporation benefit from these activities. The focus now is to create shared value between society and the corporation. CSR then becomes integral in the way it does its business.
When people talk about CSR they could very well be talking about different things. So when you speak to people, you may want to ask a few questions to clarify how they are involved. They may refer to CSR when in fact they are talking about their philanthropy or community involvement.
Felipe B. Alfonso is the vice chairman of the AIM-Scientific Research Foundation and the AFCSR executive director of the Asian Institute of Management-Ramon V. del Rosario Sr. Center for Corporate Social Responsibility.
