Corporate social responsibility: What you need to know

A local smallholder farmer sows barley in Tanzania, where SabMiller's subsidiary organizes training and networking for farmers to improve their agricultural capabilities. Photo by: OneRedEye / Newscast / SabMiller

The mission: Give 400,000 disadvantaged people in Africa, Asia and South America access to financial services such as savings and loans.

That’s what Banking on Change is all about. The three-year program began as a 2008 Clinton Global Initiative commitment between financial services giant Barclays and development nongovernmental organizations CARE and Plan.

For the joint initiative, Barclays is giving more than just money. On top of its 10 million pounds ($15.6 million) pledge, the company says it is investing “the time and business and financial expertise of its colleagues” in what it calls a pioneering partnership.

And what will Barclays’ return on investment be? Increased revenues, it affirms, have nothing to do with it.

“Banking on Change will therefore help to make the work of Barclays more sustainable by stimulating the economies of countries where projects are being implemented,” the company says. “A thriving bank needs a thriving community, so this will be a win for Barclays as well as for the people the partnership is supporting.”

Barclays’ thinking reflects the general mindset of companies that, like the banking firm, have seriously pursued social responsibility campaigns. It is a key part of many corporate strategies and a driver of cross-sector partnership in international development.

CSR defined

Corporate social responsibility is a form of self-regulation, really: companies acting voluntarily in an ethical manner, taking into account international standards and rights when doing business, and affecting positive change for their environment, consumers, workers, communities where they operate, national governments and other stakeholders.

Stakeholders – that’s actually the term that gave birth to the concept of CSR. Back in 1971, the World Economic Forum came up with the idea of stakeholder, which means that a company has responsibility beyond its shareholders.

Then in 1994, John Elkington, co-founder of SustainAbility, a sustainable business consultancy, coined a term that encapsulates the pillars of CSR: triple bottom line. TBL refers to people, planet and profit.

The beauty of CSR

CSR comes in different shapes and sizes – and companies may call it by a variety of names, including “corporate citizenship,” “sustainability,” “community investment,” or “corporate responsibility.” CSR functions may be managed by a dedicated company department, a specially set-up foundation or individuals handling other functions at the company, such as communications or business development.

The Center for Global Development outlines what it calls a menu of options for companies that want to take part in the global anti-poverty campaign.

Standards compliance: Companies adhere to higher standards of business practice, including labor rights, working conditions, environmental protection or anti-corruption.

In 1991, for instance, Levi Strauss established a comprehensive workplace code of conduct for its manufacturers. Its terms of engagement with manufacturers, or Levi’s certification, define labor, health and safety and environmental requirements and are based on U.N. accords such as the Universal Declaration of Human Rights and International Labor Organization core conventions.

“When we launched our requirements, people said we were going to destroy the cost advantage of outsourcing,” the company told CGDev. “But we started noticing that after a time, factories were surprisingly eager to fix any violation or problem. We then discovered that they were selling their production capacity to other brands on the basis of their Levis certification.”

Charitable giving: Companies provide direct financial support to public organizations or nonprofits that work on issues reasonably aligned with the company’s interests and corporate culture. It is deemed the most straightforward way for a company to contribute to development efforts.

Ikea, for instance, is UNICEF’s largest corporate cash donor, having committed more than $190 million to the U.N. program. In 2000, the two forged a partnership with the Indian government to tackle the root causes of child labor in the country’s carpet belt. According to UNICEF, the program has enabled 80,000 out-of-school children to have an education, immunized 140,000 children and 150,000 women, and empowered more than 22,000 women to pursue sustainable economic opportunities through self-help groups. The agency expects the partnership to benefit 78 million children, 4 million adolescents and 10 million women in India by 2012.

Resource engagement: Companies donate their own goods, services and expertise. According to CGDev, this approach “arguably provides greater leverage to development activities than cash because it brings to bear a company’s particular competitive advantages.”

An example is Cisco, which, through its Networking Academy, hopes to help increase access to career and economic opportunities in communities around the globe. What started as a small-scale program in 1997 is now a global network of 10,000 academies that help students in 165 countries acquire practical skills in designing, building, securing and maintaining computer networks. More than 4 million students have participated in the program, which has won recognition from the U.S. State Department, Computerworld Honors Program and Points of Light Institute.

Commercial leverage: Companies leverage their commercial presence to support efforts that can improve the lives of people they employ and communities where they operate.

In Central America, Wal-mart Stores supports local farmers in diversifying their crops to meet market demands through its Tierra Fertil initiative. As part of the program, a group of agronomical engineers advise farmers in Costa Rica, Nicaragua, Honduras, Guatemala and El Salvador on matters such as seed quality, soil use and the responsible use of agrochemicals. The company says it has bought more than $90 million in fruit, vegetables and grains through the initiative, which in turn has helped 2,200 farmers and enhanced the quality of life of more than 16,600 families in the region.

Policy advocacy: Companies use their influence to lobby home and host governments and the international community for better policies.

Levi’s participates in several multistakeholder initiatives both in the United States and internationally to press for the reform of policies on trade, worker rights, the environment and HIV/AIDS. Amy Leonard, the company’s senior vice president for brand product management, serves as ambassador for Oxfam America’s Sisters on the Planet, which in 2009 lobbied the U.S. Congress and Obama administration to provide funding for increased climate resilience in developing countries.

The cost-benefit calculus

CSR budgets vary greatly. But regardless of the cost, investing in CSR can pay off financially and otherwise.

Case in point: Levi’s saw a 35 increase in 501 jeans sales in South Africa in connection with its Red for Life campaign. The jeans and the campaign had the same target audience: the urban, influential young people in South Africa, who are also among the most at risk of contracting HIV. For the program, the company worked with New Start, a local NGO, to organize a concert series that offered tickets to young people who would undergo HIV testing and featured South African music stars, many of whom also got tested publicly and participated in Levi’s public service announcements.

And the list of rewards to companies implementing CSR programs goes on. These include enhancing public image, attracting investors and customers that care about issues such as poverty, building customer loyalty, strengthening corporate culture that can help in the recruitment and retention of high-caliber talent, and providing learning opportunities for staff.

Social reporting

Because of the voluntary nature of CSR, there has been some concern about the level of commitment to their pledges. Some have accused companies of “greenwashing,” or turning a profit by unreasonably making people believe that the company’s policies and products are pro-environment.

That’s where social accounting comes in. Today, several frameworks for social accounting, auditing and reporting exist, such as the United Nations Global Compact, which focuses on the Millennium Development Goals.

Launched July 26, 2000, the U.N. Global Compact is the world’s largest voluntary corporate responsibility initiative. It has more than 8,700 corporate participants and other stakeholders from more than 130 countries, which share what is called Communication on Progress each year on their progress toward implementing the compact’s 10 principles, which relate to human rights, labor, environment and anti-corruption.

Growing trend, diverse opportunities

The aid community is increasingly engaged in private sector CSR, led perhaps by the U.S. Agency for International Development and other donors eager to stretch their scarce resources. But companies also increasingly partner with the nonprofit sector on social responsibility initiatives.

No wonder, then, that CSR offers diverse job opportunities for socially conscious professionals. CSR jobs generally fall into these categories: CSR specialist, foundation officer, and consultant. Read our article ”Corporate Social Responsibility Jobs: What You Need to Know” to learn more.

About the author

  • Eliza villarino 400x400

    Eliza Villarino

    Eliza Villarino currently manages one of today’s leading publications on humanitarian aid, global health and international development, the weekly GDB. At Devex, she has helped grow a global newsroom, with talented journalists from major development hubs such as Washington, D.C, London and Brussels. She regularly writes about innovations in global development.