Blogs & Comment

The CSR litmus test

Ask yourself some questions before blithely tossing around the term "Corporate Social Responsibility."

(Photo: Jan Stromme/Getty)

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.

In a forthcoming short article in Canadian Business, I riff 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 winery’s story serves as a nice example. 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 your particular reaction to the story of Solms-Delta is also a good way to delve into your own understanding of the term “Corporate Social Responsibility.” Consider: Is highlighting the past as the company is doing 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, then it seems better cast as a matter of social responsibility. Right?

To push this theme further, let’s move from the Solms-Delta example and consider a hypothetical company. Here’s a litmus test to help you figure out your own views about CSR, and what those views imply. So 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;
  • …pays 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 it needs to do in order to garner that designation? Is the company 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 a specific little box called “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 really share the same understanding of what social responsibility really means.