Systemic CSR, or CSR 2.0

by Wayne Visser

Wayne Visser (South African, born 1970) is an author, poet, social entrepreneur, speaker, researcher, and lecturer in sustainability, corporate social responsibility, and purpose-inspired business. He is founder and director of the think tank CSR International and a part-time academic at the University of Cambridge.

Corporate sustainability and responsibility (CSR)—which also goes by various other proxy terms, such as corporate social responsibility, corporate citizenship, corporate sustainability, and business ethics—is the way in which business seeks to create shared value in society through economic development, good governance, stakeholder responsiveness, and environmental improvement. Put another way, CSR is an integrated, systemic approach by business that seeks to build, rather than erode or destroy, economic, social, human, and natural capital.Today, companies tend to practice one of four types of CSR, depending on their level of maturity, namely, defensive CSR (compliance-driven, risk-based), charitable CSR (altruism-driven, philanthropy-based), promotional CSR (image-driven, PR-based), and strategic CSR (product driven, code-based). All four of these types of CSR—which I call CSR 1.0 collectively—have failed to reverse the most serious negative social, environmental, and ethical consequences of the “free” market.

In this sense, CSR to date has failed. The failure of CSR 1.0 has three basic causes: it has promoted an incremental approach to social and environmental improvements; it has remained a peripheral function in most companies; and customers and the markets have not consistently rewarded responsible and sustainable corporate behaviour or punished irresponsible and unsustainable companies.

Hence, what is needed—and what is just starting to emerge—is a new approach to CSR, which I call systemic CSR, or CSR 2.0. This is a purpose-driven, principle-based approach, in which business seeks to identify and tackle the root causes of our present unsustainability and irresponsibility, typically through innovating business models, revolutionising their processes, products, and services, and lobbying for progressive national and international policies. This leads to my first forecast.

Forecast 1

By 2052, we will see most large international companies having moved through the first four types of CSR (defensive, charitable, promotional, and strategic) and practicing, to varying degrees, CSR 2.0.

But what will CSR 2.0 look like? How will we know it when we see it? The first test is creativity. The problem with the current obsession with CSR codes and standards is that it encourages a checklist approach to CSR. But our social and environmental problems are complex and intractable. They need creative solutions, like Freeplay’s battery-free and off-grid windup technologies (for flashlights, radios, and computers, for instance), or Vodafone’s M-Pesa scheme, which allows the unbanked to perform basic financial transactions using mobile phones.

Forecast 2

By 2052, reliance on CSR codes, standards, and guidelines will be seen as a necessary but insufficient way to practice CSR. Instead, companies will be judged on how innovative they are in using their products and processes to tackle social and environmental problems.

Another shift that is only just beginning is taking CSR solutions to scale. There is no shortage of charming case studies of laudably responsible and sustainable projects. The problem is that so few of them ever go to scale. We need more examples like BYD making small electric cars in China or the Grameen Bank microcredit movement.

Forecast 3

By 2052, self-selecting “ethical consumers” will become less relevant as a force for change. Companies—strongly encouraged by government policies and incentives—will scale up their choice editing, ceasing to offer “less ethical” product ranges, thus allowing guilt-free shopping.

Forecast 4

By 2052, cross-sector partnerships will be at the heart of all CSR approaches. These will increasingly be defined by business bringing its core competencies and skills (rather than just its financial resources) to the party—as Walmart did when it used its logistical capability to help distribute aid during Hurricane Katrina, or as the Corporate Leaders Group on Climate Change did when they urged the UK and EU governments to set bolder climate policies.

Forecast 5

By 2052, companies practicing CSR 2.0 will be expected to comply with global best-practice principles, such as those in the UN Global Compact or the Ruggie Human Rights Framework, but simultaneously to demonstrate sensitivity to local issues and priorities. An example is mining and metals giant BHP Billiton, which has strong climate change policies globally, as well as malaria prevention programs in southern Africa.

Forecast 6

By 2052, progressive companies will be required to demonstrate full life-cycle management of their products, from cradle to cradle. We will see most large companies committing to the goal of zero-waste, carbon-neutral, and water-neutral production, with mandated take back schemes for most products. We need a cradle-to-cradle approach, ensuring that products and processes are inherently “good,” rather than “less bad,” as Shaw Carpets does when taking back its carpets at the end of their useful life.

Forecast 7

By 2052, much like the generally accepted accounting principles (GAAP), some form of generally accepted sustainability principles (GASP) will be agreed upon, including consensus principles, methods, approaches, and rules for measuring and disclosing CSR. In addition, a set of credible CSR rating agencies will have emerged.

Still, the role of government in the next forty years will be crucial. Many of the issues that CSR is currently trying to tackle on a voluntary basis will be mandatory in the future, especially with regard to emissions reductions (toxics and greenhouse gases), waste practices, and transparency. There will also be a gradual harmonisation of country-level legislation on social, environmental, and ethical issues.

However, CSR will remain a voluntary practice—an innovation and differentiation frontier—for those companies that are either willing and able, or pushed and prodded through nongovernmental means, to go ahead of the legislation to improve quality of life around the world.

Forecast 8

By 2052, corporate transparency will take the form of publicly available sets of mandatory disclosed social, environmental, and governance data—available down to a product life-cycle impact level—as well as Web 2.0 collaborative CSR feedback platforms, WikiLeaks-type whistleblowing sites, and product-rating applications (like the GoodGuide iPhone app).

Forecast 9

By 2052, the way that companies manage CSR will also change. CSR departments will most likely shrink, disappear, or disperse, as the role for a CSR generalist is confined to small policy functions. By contrast, more specialists in various aspects of CSR—such as climate, biodiversity, human rights, or community involvement—will be required throughout many departments of a corporation. And employees’ performance on CSR issues will increasingly be built into corporate appraisal systems, affecting salaries, bonuses, and promotion opportunities, as is already the case at Arcor, the confectionary company in Argentina.

Collectively, these forecasts reflect my belief in an increasingly widespread adoption of CSR 2.0 over the decades ahead. By 2052, CSR 2.0 reporting will have exposed the total impact of large companies on global sustainability. This will act to push the companies toward becoming part of the solution to the sustainability crisis.