News

Panel Discusses the New Role of Corporate Social Responsibility

On October 19, Professor Herman B. Dutch Leonard moderated a panel discussion with industry leaders on the growing importance of corporate social responsibility within their organizations.

It is not often that you hear a director from a multibillion dollar company admit her limitations. But that is exactly what Sarah Severn, Director of Horizons, Corporate Responsibility, Nike Inc., recommends that her fellow Corporate Social Responsibility (CSR) managers do. On October 19 in the Spangler Auditorium, Professor Herman B. Dutch Leonard moderated a panel discussion hosted by the Social Enterprise Initiative and the HBS Boston Alumni Association on companies’ growing interest in demonstrating their social consciousness. Other panelists included Joseph Kwasnik, VP Environment at National Grid, Mark Buckley, VP Environmental Affairs at Staples Inc., and Kevin Martinez, Director, Community Affairs at The Home Depot.

“Don’t be afraid to be transparent and admit that you are not perfect” advises Severn. Given the increasing complexity and continuous changes to social concerns of various stakeholders, companies are sometimes caught off guard-and find themselves caught in a scandal. Severn would know. Nike faced consumer outrage over human-rights violations in its factories, leading to the detriment of the company’s brand and profits. Today, Nike’s CSR department has transformed its focus from risk avoidance to innovation, from policing to capacity-building throughout the organization. These themes are consistent with the trend in companies across North America, Prof. Leonard explained.

Prof. Leonard presented three major themes that are influencing CSR activities in recent years. The first is the integration of social concerns into the main business processes. No longer are the CSR managers’ duties limited to a specific community project. Today, they are responsible for integrating socially-beneficial activities into the organization. Prof. Leonard elicited chuckles when he suggested that if the CSR managers are doing their job properly, they will eventually make their roles obsolete.

Secondly, companies are devoting more attention to building the business case for corporate social responsibility. Quantifying the impact of CSR programs on company profits helps obtain buy-in across the organization, making integration easier. This is not to say that quantifying benefits is easy; short-term costs are often balanced by long-term, less certain benefits, and it is difficult to determine the dollar value of such benefits as brand strengthening and consumer loyalty.

Lastly, companies are realizing that they can increase their own competitive advantage (and consumers’ willingness to pay for their products) as they encourage consumers to demand socially-responsible products. This “pull” marketing strategy suggests that companies can play a role in educating consumers. How to implement this strategy, however, is another matter; companies collaborating to educate consumers may be opening themselves up to anti-trust violations. External leadership of this coordinated marketing strategy, while optimal, begs the question “Who will have the desire and the motivation to do so?”

While these and many other important questions continue to play themselves out in the CSR arena, the important thing is that the dialogue exists. Given the attendance at this event, and the increasing popularity of Social Enterprise events as a whole, future leaders are recognizing the important role CSR will play in their careers.

November 6, 2006
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