Do patronage, sponsoring and charitable works provide conclusive evidence of corporate social responsibility? The answer here is an awkward one – the main concern is not to hurt or de-motivate. Because, of course, generous patronage, sponsoring and charitable involvement are, in themselves, laudable.
The situation bears a striking resemblance with the first forays of business into the sphere of environmental protection: With “end-of-pipe” measures – precautions that only take effect “downstream”, i.e. at the end of manufacturing processes – many initially endeavored to repair and make good what had previously been torn asunder in the value chain. Naturally, then as now knowledge and awareness played a decisive role. This is why sustainable environmental protection today is targeted at the source of damage wherever it may occur. Where possible, efforts start right at the very first stage of the logistical chain, progressing from the raw material via the end product and through to disposal.
Transferred to corporate social responsibility, this means that responsibility as an attribute cannot be retrospectively assumed. Rather, it has to be there right at the core of entrepreneurial activity; and, if we want to gain credibility, it must be seen to be a constituent part of that core. The value contribution of a corporation to society lies primarily in its services and products; patronages or sponsoring projects are, to use the same metaphor, “end-of-pipe” measures. Social responsibility – if it is to be taken seriously – must be apparent along the entire value chain and in the treatment of employees. Once again, sustainability is the primary criterion.
The key question when determining the social responsibility of companies therefore reads: How – in what way – does it turn a profit, and does it behave responsibly in the process? The question as to what a company does with the profits it makes tends to only be of secondary importance.
Do they, for example, support their employees in their continuing professional development and personal life planning so that each individual, male and female, can decide in favor of both family and career? Do companies endeavor to ensure that, in our aging society, their employees can continue to perform and thus make a contribution if they so want? Do companies train sufficient apprentices? Do they treat minorities with due fairness and sensitivity? Are they open in the information that they provide to their customers with respect to all, even the critical, aspects of their products? And if so, is this policy – in the case of international corporations – also practiced worldwide? Do they observe a code of conduct and repudiate bribery and corruption? Are their financial reporting practices totally “above board” and thoroughly transparent? Is their production process environmentally compatible? Are they committed to resource conservation?
Only companies able to answer these questions with a resounding “yes” can claim to have correctly understood what underlies corporate social responsibility. It is a concept based on the three pillars of economic responsibility, ecological awareness and employee care.
There is no conflict between moral stance and market economy. Built on this basis, sponsoring and charity programs are indeed desirable indications that companies are actively involved in their environments and communities. It may well be that these measures support business success, for example within the framework of local affairs programs or the targeted addressing of customer groups – but they have mighty little to do with CSR in its true sense.
Ernst Primosch
Corporate Vice President, Head of Corporate Communications
Henkel KGaA
If we consider PR as a management function that builds relationships in a world that is a big web of connections, we can not divide it from CSR activities. Few months ago, using the newest CSR typology, I did a research that aim was to clarify the interdependence between PR and CSR.
Here are the conclusions:
1. Strategic philanthropy ? a company participates in corporate community involvement programmes trying to bring some contribution in social issues. The image is an important reason for CSR activities. In Poland the performance of these initiatives is not measured.
If a company does a strategic philantropy, it usually uses PR to create a corporate image, so there is not a lot about aware relationships building with its stakeholders. We have here a majority of assymetric communication, PR is more tactic than strategic. We could say that CSR is here as a PR tool but PR is just around image.
2. Stakeholder engagement – mutual benefits and development, a company is involved in a constant dialogue with its key stakeholders, tries to find a balance between the expectations and needs of an every interested part. The relationships are very important for effectiveness.
In this CSR Model we have often 2 possible PR models: Freeman proposes an attitude where a company is in a centre and tries to manage the relationships with its stakeholders (asymmetrical PR model often). The others reearchers convince that a company is a part of social structure, there is a increasingly growing need of ?issue management?, so a company must conduct a dialogue with stakeholders as equal partners. We can have here a majority of symmetrical communication – too idealistic but it if a company is aware of this way of thinking and its role in society, this can be a very interesting if we think about the future results. A dialogue stimulates the competetiveness and company’s development.
3. Social opportunities inspired by CSR ? social innovation and partnership that could be the results of a close stakeholder collaboration connected with symetric communication. The aim is to create a mutual and sustainable development and constant value as well within a company and its stakeholders. Proactive strategies on the markets occur as a result of social PR of particular issues. This kind of activity could be inspired by prof. M. Yunus. So here we have a great potential for significant innovations where CSR is a good inspiration for stimulating business. Not only in USA we have dynamicly growing market of eco – products with aware customers, so how many possibilities do we have here? A lot!
I am wondering when PR guys will start communicate about their companies as parts of economy, society, ecology? Someone told me that there should be 80% of CSR activities and 20% of communication about that.
Everything is connected, economy is becoming more social, corporations have bilions of shareholders, we can get information about everybody because of the dynamic information systems, Internet…
Ernst, you mentioned that “CSR is a concept based on the three pillars of economic responsibility, ecological awareness and employee care” but where do we have a social impact? Why companies do not measure that?
Is CSR only a reaction for public opinions’? I guess that social innovation CSR model is something more.
With regards,
Iwona Kuraszko
Ernst
Just saw your Conversations on IPR homepage. I simply start by telling my clients that it’s not about how you give some of your money away, it’s about how you make your money!
Last year I saw adverse environmental impacts firsthand in China and Tibet; as with brand, global transformation is an intellectual exercise of communicating the usefulness of stable, practical and productive processes� then bridging action gaps to get to where you want to be in 5 years. Always seeking a larger context to address complexity-led imperatives.
Thank you.
Kind regards,
Ed
Corporate social responsibility must indeed extend beyond philanthropy, but philanthropy cannot be excluded from CSR.
Ernst, with whom I serve on the Institute for Public Relations? Board of Trustees, makes a forceful and much-needed argument that social responsibility ?must be apparent along the entire value chain,? not just after profits are made. Although he states that his intention is not to de-value philanthropic behavior by companies, acknowledging that it is ?laudable? and may well support business success, he mistakenly ? in my opinion ? relegates philanthropy to a secondary position, saying that it has ?little to do with CSR in its true sense.?
As someone who has studied philanthropy in the context of public relations, I disagree. Philanthropy is an integral part of CSR. It is a measure of a company?s acceptance that its success and survival ? its own sustainability ? is dependent on effectively managing environmental relationships. Common understanding of corporate philanthropy is based on the concept of ?enlightened self-interest,? meaning that corporations hold dual interests in self and others when enacting philanthropic behavior. Such mixed motives arguably underlie all CSR initiatives. Doing ?good? without concern for doing ?well? represents pure altruism, which is illogical in a corporate setting (and rarely is present in most philanthropy, including individual giving).
My disagreement with Ernst?s essay likely is due to misunderstanding about the concept of ?citizenship,? which he defines as acts of ?patronage, sponsoring and charitable works,? and current thinking about corporate philanthropy (with an admittedly U.S. bias). The following points support my perspective. For the sake of brevity, they are sketchy in content and attributions. I hope to expand on this subject in a future document available through the Institute for Public Relations.
? Philanthropy encompasses more than just giving away pre-tax profits. Its commonly accepted definition is voluntary action for the public good, which includes voluntary giving, voluntary service, and voluntary association (Payton, 1988). This definition provides the basis for our idea of the good corporate citizen ? one that is involved in the life of the community.
? Recipients of corporate philanthropy are nonprofit or nongovernmental organizations (NGOs), which constitute a third sector of society ? consisting of a mindboggling array of entities from hospitals and universities to environmental groups and human rights organizations to religious congregations and day care centers ? that occupies the social space between the market and the state. Characteristically, they are neither businesses (for-profit) nor government agencies.
? Philanthropy is the means by which corporations manage their dependencies on nonprofit organizations.
o Corporations rely on philanthropy to ensure a healthy society conducive to business, to protect capitalism, and to avoid big government.
o Corporations depend on nonprofit organizations to protect and enhance profits.
o Corporations utilize philanthropy targeted at nonprofits with certain missions to achieve strategic business objectives.
Ernst states that corporate social responsibility is based on three pillars: economic responsibility, ecological awareness, and employee care. I would add a fourth pillar (that retains his alliteration): enlightened philanthropy.
The value chain idea is a great way to distinguish CSR from philanthropy. I’m always amazed that public relations people equate social responsibility with philanthropy and charitable giving. Quite often, these contributions are made to cover up social irresponsibility–i.e., bad behavior by organizations. Edward Bernays once said that public relations is the practice of social responsibility. That is, the purpose of public relations is to help organizations behave more responsibly in all their decisions, policies, and behaviors that have consequences on stakeholders. We do that by participating in strategic decision-making and corporate governance and providing publics a voice in the decisions that affect them.
Mr Primosch has given a new face to CSR in this article – stressing what we know but refuse to acknowledge publicly. that CSR should be part of the entire value chain. I hope this will set the way for advocacy in major corporations around the world to apply value along the entire production chain rather than selectively at the end of the chain.