Will good intentions wither in tough times?

Corporate Social Responsibility 7 Comments

One of the hotly debated topics in the field of business ethics at the moment seems to be the question of the type of impact which the current challenging economic environment will have upon Corporate Social Responsibility (CSR) – efforts on the part of companies to conduct themselves in a manner which is responsible from a social, economic and environmental perspective as well as a business perspective.

My thoughts – overall, I would not be surprised if many companies seek to pare back their level of CSR related effort, particularly as firms are, as The Economist puts it:

“.. a long hard look at the resources they devote to everything from supporting charities to making their activities carbon neutral.”  (refer article)

However, CSR encompasses a very broad range of activities, and I would think that the impact of the challenges associated with the current economic environment will vary according to the nature of each particular activity.

 
Observations about the impact of the downturn from a CSR perspective
A thorough examination of the likely impact of the downturn with respect to each type of CSR related activity is well beyond the scope of this discussion.

Nevertheless, I would like to make a few observations:

 
• Corporate philanthropy.

Probably one of the hardest hit areas, not least because this form of CSR: (a) involves the direct outlay of scarce financial resources, as well as benefits which can be difficult to quantify and are often expected to accrue over a lengthy time period; (b) expenditure in this area can be curtailed without a great degree of direct or immediate impact upon a firm’s business operations.

Regardless of how moved one may be by Ford’s assertions that it remains ‘committed to the concept of giving,’ the fact that the automaker expects it’s corporate donations to be down forty per-cent next year (refer article linked to above) speaks a great deal about the prospects of any areas of corporate philanthropy which are not very closely related to an organization’s operations or direct branding strategy. 

 
• Community Business Partnerships.

Interesting area.

Commitments to these types of partnerships, which typically involve social or environmental partnerships between companies and NPOs or community groups are generally of a fairly long term nature.

With respect to existing projects, I doubt there will be many cases where firms reneg on commitments which they have already made. Compared to straightforward philanthropy, I would have thought that these kinds of projects would generally tend to be more closely aligned with both operational requirements and branding strategy, reducing the likelihood to which they would be subject to curtailment. Moreover, corporations would find it difficult to pull out of their commitment to such projects without suffering considerable damage from a reputational viewpoint.

That said, I would not imagine that firms would be particularly keen right now to enter into new commitments in this area. With short term survival proving enough of a challenge for some firms, I cannot imagine that investment in new social partnerships would exactly be a top priority.

 
• Investment in energy efficiency and environmental improvements.

Probably the most risilient form of CSR at the moment, particularly given the extent to which energy efficiency helps improve not just the environment but the bottom line through cost reductions as well as government enthusiasm to direct stimulus related funding toward any areas with a ‘green’ label attached to them.

That said, I would have thought that investment in some of the more capital intensive projects may be subject to some degree of curtailment, particularly in cases whereby large portions of the anticipated cost reductions are not anticipated to be realized until the project concerned has been operating for several years.

 
Genearal comment – back to core business
Overall, whilst I would certainly have thought that some areas of CSR related effort may be subject to curtailment, I do not imagine that firms will abandon the concept altogether.

Instead, what is more likely is a refocusing of CSR effort toward projects which: (a) are more closely tied to branding strategies or business operations; (b) are anticipated to produce business benefits of a more obvious and (ideally) quantifiable nature; and (c) do not involve large outlays or long term commitments of financial resources.

Any forms of CSR efforts which do not fit the above criteria, I would imagine, will be the subject of an increasing level of scrutiny among corporate boards.

 
Over to you
What do you think the near term future holds for CSR related effort?

7 Responses to “Will good intentions wither in tough times?”

  1. Luke Gedeon Says:
    May 30th, 2009 at 12:55 am

    Some charities are going to have a hard time, but when you are just getting started, like I am, you don’t know any better. So it is all up hill from here for me and C4C. :)

    The good news is that companies are still giving. Speaking of which, I could really use your help with a group writing project sponsored by Zemanta. They are giving $3000 to the cause(s) that can get the most bloggers to post about them on their blog.

    Details are at: http://luke.gedeon.name/donate-blog-post-c4c.html

    Luke Gedeons last blog post..Why I Joined Caring for China

  2. Brad Shorr Says:
    May 30th, 2009 at 2:47 am

    Andrew, More than likely you are right, but tough times bring out the best and worst in people and companies. I wouldn’t be surprised to see some firms step up their CSR efforts at this time. For one thing, organizations that are truly committed will want to respond to the greater need. For another thing, it’s smart business. People remember good deeds done in bad times far longer than good deeds done in good times. Here is an opportunity to build a loyal customer base that could last for generations. Opportunities like that don’t come along very often. I hope I’m right about this!

    Brad Shorrs last blog post..How to Prepare Yourself for Launching a Business Blog

  3. Andrew Says:
    June 1st, 2009 at 7:20 am

    Brad,

    I hope so too!

    In addition to ensuring their survival during the tough times, those companies which adopt a more far-sighted approach will want to position themselves to take full advantage of any lasting recovery. In order to do this, they will need to maintain and continue to invest in their brand names throughout the tough times.

    Andrews last blog post..Will good intentions wither in tough times?

  4. drew Says:
    June 1st, 2009 at 10:21 pm

    Hi Luke,

    Sorry about the delayed response – your post was hiding in the ‘Awaiting moderation’ queue.

    It sounds like a wonderful project, and I will certainly help if I can. That said, the deadline is fast approaching, and I can’t think of any particular charities for which I know a great deal about in particular, so I can’t promise anything.

  5. Luke Gedeon Says:
    June 1st, 2009 at 10:57 pm

    Thanks Andrew,

    Well, there is one particular charity I was hoping you could mention. I am trying to promote the Caring for China Center, and I would love to introduce you to this awesome organization.

    I won’t include a bunch of links in this comment so I won’t get dropped into the moderation queue, but I can send you other links and answer any questions via email, if you are willing.

    Luke Gedeons last blog post..Xu Wenli: Biographical Notes

  6. Mark Says:
    June 2nd, 2009 at 1:47 am

    You have done a very good job outlining this. Much will depend on the depth of a compaines a pockets and the scope of their vision. Some will have myopic vision and curtail their spending and involvement when in the long term this will cause more harm to their business than the short term savings will gain them.

    Marks last blog post..The Magic Grocer

  7. Andrew Says:
    June 3rd, 2009 at 9:15 pm

    Luke,

    By all means, I would be interested to find out a little more about CFC, so I would certainly be delighted if you could send a few links about it.

    I can’t promise anything with regards to the group writing project due to time constraints, but if I do have a chance, I will see what I can whip up.

    Mark,

    Yes, pockets and vision will be key determinants in this regard.

    For companies which are really on the ropes, some degree of curtailment of CSR spending, at least in the short term, would make sense given that the long term view only helps if you can survive the short term.

    That said, companies who are not in immediate financial distress would be well advised not to neglect CSR during the tough times, since doing so would likely jeopardize their long term future prospects.

    Andrews last blog post..Fear factor on the way up

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