The CSR Litmus Test

I wrote a short article for a forthcoming issue of Canadian Business, riffing on a recent Globe and Mail story about a South African winery that is working hard to face up to its slave-holding past. The Solms-Delta winery’s owners have done things like set up a museum in its wine cellar, and establish a trust for the benefit of workers. This is clearly admirable; other South African wineries generally prefer to sweep the past under a rug. But is highlighting the past this way an obligation owed to the winery’s current employees? If so, then Solms-Delta is simply meeting its ethical obligations. But if this is not something owed to current employees, it is better cast as a matter of social responsibility.

I’ve complained ad nauseum about the fact that there’s no clear, agreed-upon definition of CSR (Corporate Social Responsibility). Many definitions say something about “social contribution” or “giving back to the community.” But just what that amounts to is up for grabs. It might mean something trivial, or it might mean something unfairly burdensome.

Here’s a litmus test to help you figure out your own views in this regard, and what those views imply. Imagine a company that does all of the following, with reasonable consistency:

  • Makes a decent product that people feel improves their lives in some small but meaningful way;
  • Treats employees fairly;
  • Deals honestly with suppliers;
  • Tries to do a decent job of building long-term shareholder value;
  • Cleans up their messes, environmental or otherwise;
  • Does its best to follow all applicable laws, and trains and rewards employees suitably;
  • Pay its taxes, making use of all relevant exemptions but not cynically seeking loopholes.

Next, if you consider yourself a fan of CSR, ask yourself this question: Would such a company count as a socially responsible company, in your books? Or is there something more they need to do in order to garner that designation? Are they ethically obligated to do something further?

If your answer is “Yes, that’s a socially responsible company!” then good for you. That’s a very reasonable answer. But then you should ask yourself two questions. One, why are you attached to the label “CSR”? Why not just call them a company that does right, or that acts ethically? Why try to shoehorn all the good stuff listed above into the little box of specifically social responsibility?

If your answer is “No, they’re still not giving back to the community!” then next you need to ask yourself what more and why. The company described above is engaging in voluntary, mutually-advantageous transactions with customers, making those customers better off (by their own lights). It is doing something good in the world, and being conscientious about how it does it. That seems pretty decent.

And whatever your answer is, taking this test should clarify both what your own views are, and perhaps why the term “CSR” is far less useful than it is popular. And whenever two people think they agree on the importance of CSR, each of them ought to doubt — or ask — whether they’re really agreeing on the same understanding of what social responsibility really means.

4 comments so far

  1. Cathie Guthrie on

    Chris,

    Yes, how frequently the understandings differ!

    I am inclined to opt for the social impact of good business as the CSR definition to best align with my own perspective. How a company (social enterprise, SME or MNE) treats and engages its own people, how it looks up and down the supply chain not only to mitigate risk, but to promote best practices, how it assesses its environmental footprint and introduces corrective action and finally, how it responds to community all have “social” consequences that can be measured quantitatively and qualitatively. Social good need not be the primary motivator.

    I am also of the view that personal epiphanies happen, usually from repeat exposure, over time, to intelligent, insightful conversation, which have previously eclipsed one’s world view.

    Perhaps there should be a different term (or terms!) to capture the various efforts that try to squeeze into the CSR definition, although I wouldn’t want to recommend such a pursuit to the faint of heart!

    Good post, Chris!

    Cathie Guthrie

  2. Sanna on

    This is interesting! I have just started the course Business Ethics and I stumbled upon your blog.

    I would say “Yes” to your question. According to me, only human beings have moral responsibility for their actions and thus it is the people within the organization who are individually responsible for what they do. In this case, I would say that they do enough – why should you have to give away, just because you are in a company?

  3. Harinder Singh on

    Hi Chris,

    Another useful post. I guess from my point of view I would also say ‘yes’
    I generally use Carolls model of CSR when trying to gain some elementary understanding of whether a business is socially responsible or not. Caroll states that a business should be profitable, legal, ethical and philanthropic. Most of these aspects are mentioned in your list.

    Of course to do the latter of that list is now characterised as just simply ‘good business’ or taken further can be described as marketing or brand building exercises. Which then leads us to the point that do they need to be ‘shoe-horned’ into the notion of CSR or are they now just an integral part of the companies marketing and PR strategy?

    However being ethical and philanthropic should not come at the expense of being profitable and legal. After all as we understand from previous scholars the business of business is business.

    I think ethics is that paradigm shift in business which has grown in demand faster than many business have been able to realise or understand. Being proactive and responding to social needs was once a highlight of some businesses however now is viewed by the acute observer as just good market planning and forecasting.

    Thanks again for the post and all previous literature.

    Kind Regards,

    Harinder Singh

    hsingh19 (twitter)

  4. Julia Fernandes on

    Neat post Mr Chris.

    I personally believe that if a company follows all the seven points noted in the litmus test they are already a socially-responsible company. Charity as they say begins at home. If you cannot be true to your customers and employees whatever social good you do to the community gets negated.

    Having said that let me add further that giving should come from within and it should make a difference to the cause you intend supporting. Having interacted with companies over a long period of time on CSR I have come to the understanding that 99.9% companies undertake CSR only on paper, or they practice conditional CSR – for example some companies refuse to support projects that fall in locations where they do not have a presence!

    Chris, when a company follows all the points you have mentioned in the litmus test, and when they go further and make a real difference to even one cause in any way – that for me brings out the real meaning of CSR.

    I am sharing the link of a short note I have written on the role of values in business. Hope this helps business leader and decision makers.

    http://www.godlovesyou.page4.me/businessworries.html


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