Corporate Social Responsibility Is Not Your Organization’s Purpose
It’s happening again. Companies are confusing important terms. In doing so they are taking advantage of you, the consumer. Equally horrific is that many employees have to stick up for it.
Corporate Social Responsibility. CSR for short. Sounds good. If done right it is good. CSR ought to be a critical component to an organization’s operating ethos, its values, and its purpose. Every organization should be ‘doing’ CSR. Many are doing it exquisitely well.
Take for example The Lego Group, which recently topped the Reputation Institute’s 2017 Global CSR RepTrak list. Among a number of CSR initiatives, Lego introduced their Sustainable Materials Centre, a site “dedicated to research, development and implementation of new, sustainable, raw materials to manufacture LEGO elements as well as packaging materials.” This is CSR at its utmost finest.
But CSR is not purpose.
And Lego’s purpose is not their CSR strategy.
Using Corporate Social Responsibility as a substitute for purpose is Corporate Social Irresponsibility. It’s the dark side of CSR.
For companies that have begun using CSR interchangeably with purpose, please stop. CSR is not purpose.
The Financial Times defines Corporate Social Responsibility as “a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders.” The key point is “sustainable development.”
The purpose of an organization is different than CSR. It ought to be thought of as how it provides its various services in totality. Why is it in business? Why does it serve its stakeholders? Stakeholders include the gamut of employees, customers, partners, community members, environment/planet and those seeking a fair, financial return.
What is Purpose?
While CSR can positively affect all stakeholders it is not to be confused with an organization’s purpose.
An organization’s purpose centers around five “Good DEEDS” defined as follows from my second book, THE PURPOSE EFFECT:
- Delight your customers.Working with and for the customer always remembering why an organization exists in the first place.
- Engage your team members.Team members need purpose in their role to flourish, and they need to know they are able to create value while simultaneously feeling valued.
- Ethical within society.Decisions need to be made—be it financially, environmentally, socially—that are always ethical in nature.
- Deliver fair practices.Consistent and positive people practices inside the organization to unleash the creativity and productivity of team members.
- Serve all stakeholders.The organization has a responsibility in society to positively affect customers, team members, the community, environment and owners alike.
More practically, the purpose of an organization is to serve society now and into the future.
It exists to aid all stakeholders, solving wicked problems to better society. It must be thinking and making decisions for the long-term while operating in the day-to-day for the short-term. It is a balancing act between today and the future, using the Good DEEDS outlined above.
One country that seems to understand the importance of Good DEEDS is the Netherlands. The Dutch Corporate Governance Code states:
“A company is a long-term alliance between the various stakeholders of the company. Stakeholders are groups and individuals who, directly or indirectly, influence – or are influenced by – the attainment of the company’s objectives: employees, shareholders and other lenders, suppliers, customers, the public sector and civil society. The management board and the supervisory board have overall responsibility for weighing up these interests, generally with a view to ensuring the continuity of the company and its affiliated enterprise, as the company seeks to create long-term value for all stakeholders.”
Nowhere in the “Code” do the Dutch suggest Corporate Social Responsibility can act as a prosthesis for an organization’s overarching purpose. It indicates a company has a fiduciary responsibility to represent and uphold the long-term health of its stakeholders. That is the purpose of a company. The Dutch even put this sentiment into the Code itself as follows:
“Corporate Social Responsibility is not a goal to be pursued in itself but, rather, an integral part of the day-to-day operations of a company that focuses on long-term value creation.”
CSR does not equal Purpose
Purpose is what your organization stands for. What you stand for must include CSR, but an organization does not solely stand for improving sustainable development. Important, yes. In isolation, no.
When purpose has been commandeered by an organization’s marketing department—robbing the concept of purpose by tapping into CSR as its definition—it in fact relegates the concept of purpose to that of green-washing.
Let’s call it purpose-washing.
A purpose-led or purpose-driven company is not operating with purpose when Marketing uses the term to flaunt Corporate Social Responsibility statistics. Cute commercials with a company switching its fleet of trucks to electric vehicles is superb, but it’s not purpose outright. Cutting CO2 emissions is important, but it’s not purpose outright. Opening an environmentally friendly headquarters is fantastic, but it’s not purpose outright. Being philanthropic and donating money to the community is incredible, but it’s not purpose outright.
Each of these are simply examples of CSR, components of an organization’s purpose.
Author Nilofer Merchant once wrote:
“When corporate executives use the words of purpose to tell a story of same-old-business-models with a focus on profits, they risk being called out for it. When you pursue only the veneer of the idea of ‘purpose’, you miss the opportunity for the larger idea of purpose to change you. You risk ending up with things that are only surface-deep. In the archives of corporate history, this has looked like meaningless mission statements or values carved into the lobby of buildings that nobody lives by.”
Indeed, purpose has become the “new black,” used blatantly as a “feel good” prop to indicate their organization possesses a green thumb.
Language is important. Let’s get it right.
If you work in Marketing, stop stealing the term purpose to exploit CSR. You are purpose-washing.
If you are an executive in the C-Suite, start thinking about purpose as the means to define your organization stands for. (Hint: it’s more than CSR. It begins with deploying some Good DEEDS.)
What’s Lego’s purpose? Glad you asked.
“To inspire and develop children to think creatively, reason systematically and release their potential to shape their own future – experiencing the endless human possibility.”