Can CSR weather the recessionary storms?

With discretionary budgets being slashed in the downturn, the value of corporate responsibility is being challenged. Andrew Wigley argues that it shouldn't be

In the wake of a brutal economic downturn, businesses have taken a long, hard look at discretionary expenditure and so-called soft budgets such as marketing services or corporate responsibility. Chopping charitable contributions or trimming expensive environmental measures seem like an easy way to save money.

A survey undertaken by the San Francisco-based Business for Social Responsibility reports that in general companies have cut corporate responsibility budgets, from corporate giving to investments in green technologies. It doesn’t come as a surprise.

But the same report has delivered one surprising conclusion: that corporate responsibility as a business discipline does not appear to be in retreat or under any sustained threat. Why?

Business, and particularly the financial sector, has learnt a hard lesson in this recession, the first in the 24-hour digital media cycle. Exceptional risk-taking and poor commercial judgement have been exposed, fat salaries and big bonuses derided and so called ‘casino-capitalism’ has put jobs and livelihoods at risk. Corporate distrust is at an all time high.

In order to maintain market share in this climate, businesses appear to have concluded that slashing key community engagement programmes or shortcutting environmental commitments is not the best way to begin rebuilding tarnished reputations among a suspicious customer base. Business has learnt the hard way that the media remains vigilant and unforgiving; the risks taken in the financial services sector and the poor oversight of those decisions has shone a probing light on corporate governance, a fundamental of sustainability and corporate responsibility.

Effective management of other acute reputational issues such as supply chains or carbon and water footprints are no longer optional extras; it’s now a commercial necessity if businesses intend to grow market share. A notable example of this is Cadbury’s announcement in March 2009 (an economic low) that the group would triple its sales of cocoa sourced under Fairtrade terms from cocoa farmers in Ghana. This was driven in part by a fear of future shortfalls in conventional cocoa sources but also by consumers and activists who have kept up the pressure on Cadbury, recession or no recession.

Equally the downturn has helped to focus minds and led to cost-savings which are entirely consistent with the sustainability agenda. Management is reining in business travel, while new energy saving measures are being put into the workplace, forcing the use of energy efficient technologies and reducing carbon footprints. Business also knows that employees are more motivated to work for socially responsible companies, so performance and productivity will benefit from corporate responsibility staff initiatives.

The effective management of corporate responsibility at all levels throughout business appears to be taken very seriously in boardrooms and it’s proving far more difficult to cut that budget without causing real reputational harm. Those businesses which have made deep cuts are likely to be the ones that have not truly integrated corporate responsibility, and will be reputationally vulnerable coming out of the recession.

With recent corporate behaviours looking anything but responsible or sustainable many chief executives recognise they need to rebuild trust and restore confidence in business. Ensuring corporate responsibility remains central to their strategy coming out of the recession is set to serve business and its leadership well.

For more information, videos and advice for SMEs, visit www.freshbusinessthinking.com

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