In a 1973 issue of the California Management Review, the late former
dean and professor emeritus of UC Berkeley’s Haas School of Business,
Dow Votaw, wrote what has become a seminal statement in the world of
corporate social responsibility.
“If the leaders of business
continue to conceive of social responsibility as mere euphemism for
charity, a surrogate for the corporate image, a concern only for the
public relations department, or simply a passing fad, they will fail to
meet what may be one of mankind’s greatest challenges,” he wrote, as
quoted on the UC Berkeley website.
Almost 40 years later, his words live on, although in a different world. Many corporation today are much more morally conscious in coming up with programs to win the hearts and minds of the people. While there are still critics who see CSR as a mere marketing gimmick, the success stories prove that corporate acts of giving back to society are alive and growing.
A more common CSR application has always been corporate philanthropy, which comes in the form of donations to organizations and communities in various areas, as well as sponsorship of events and causes. But as criticism grew over its long-term effectiveness, another approach came into existence.
Ideally, CSR practitioners say, corporations should do business with a heart. As part of their social responsibility, businesses should run long-term programs that help members of the community help themselves.
That is what copper and gold mining company Freeport Indonesia is striving to do through the Nemangkawi Mining Institute, located outside Timika, Papua. Locals receive training to become qualified in skills for jobs at the mine or elsewhere.
Education isn’t the only way to go. Other companies opt for economic empowerment, through micro credit financing for small business owners or direct assistance for local producers.
In the case of French oil and gas company Total E&P Indonesie, one of its CSR programs in East Kalimantan opens doors for local food and other products, increases the usage of local materials and also job opportunities for local people.
The CSR approach has changed over the years from giving handouts to needy recipients to giving them a helping hand in realizing their potential.
“We’ve been through an evolution when it comes to CSR. The former approach called for philanthropy, basically sponsorships. But now, we’ve moved on to the concept of creating sustainable development,” says Kusuma Adinugroho, head of the Sustainable Development and Societal Relations Division at Total E&P Indonesie.
Among the company’s CSR strategies are programs in economic empowerment, education, health, environment and alternative energy as well as cultural.
Taking responsibility
The term corporate social responsibility first came into use in the late 1960s and early 1970s to describe corporate owners beyond shareholders. The basic idea, as proposed by its supporters, is that corporations profit more and in the longer term by operating with a social perspective.
Today, CSR has become more “in” than ever before, and even plays a part in business performance measurement. Forbes.com reports that according to a 2010 study by PR firm Edelman’s, 67 percent of consumers are more likely to buy products and services from a company if they know it supports good causes, up more than 11 percent from the year before.
CSR also helps corporations to be seen as leaders, according to Paul Klein, founder of Impakt Corp., a Toronto-based CSR advisory services firm that has worked with major names from 3M to Starbucks.
His firm’s research revealed that companies that are considered leaders in business performance share several common approaches to CSR: business-based purpose, clear theory of change, quality and depth of information, concentrated effort and partnering with experts.
“A successful partnership between a company and smallholders requires a vision for the future, commitment and a long-term view. We believe in dealing and interacting with smallholders with absolute integrity and respect as we build the business together — as partners,” Anthony Yeow, president director of PT Hindoli, said in a written statement after receiving the 2011 Platinum Indonesian CSR Award for the company’s commitment and efforts to spur economic development in Indonesia’s agriculture and agro-industry sector.
PT Hindoli is an oil palm plantation in South Sumatra owned by US food and agricultural giant Cargill. It has won praise for its smallholder program that helps farmers in nearby Sungai Lilin to go from subsistence farming to owning a viable and healthy agricultural business, translating into higher living standards.
Residents also established cooperatives for long-term economic viability. According to a press release from the Minnesota-based company, the Sungai Lilin farmers were also among the first in the world to be certified as sustainable under the Roundtable on Sustainable Palm Oil Guidance for Scheme Smallholders.
Should there still be questions on the relevance of corporate social responsibility, advocates say it’s never too late to reiterate not only the program but also the basic principles of how a company does business in determining if it’s really in the best interests of the community. Self-evaluation doesn’t hurt, either.
“Measuring social purpose is still a work in progress and is somewhat different for every business,” says Klein in CSRleaders.com. “The key ingredients include establishing a baseline by gathering all relevant quantitative and inputs and outputs across the financial, social and environmental dimensions of business, developing a theory of change model that captures the desired social outcomes and includes a programmatic roadmap for how these outcomes are to be achieved, and conducting qualitative research to find out the ways in which CSR initiatives are making a difference for employees and external stakeholders.”