From Philanthropy to Impact Management
Corporate Social Responsibility (CSR) is still understood in different ways: as philanthropy, as a voluntary commitment to social issues, as a "green-washing" tool for multinationals, as a new model for sustainable business, or as an ideological attack on the free market economy. In fact, all these aspects are covered by one of the existing definitions. However, when we analyze the evolution of definitions, we also see a clear trend: over the past few decades, CSR has become a term that not only applies to large companies and their ethical behavior. Rather, it requires new decision-making processes from all organizations to respond to the increasingly recognized complexity of our world.
Considering significant milestones in the development of the current CSR understanding, three phases can be distinguished:
- 1950-2000: Diverse commitment to society and environment
- 2001-2010: Integration of social and environmental concerns in the core business
- 2011-today: Impact management
Each of these phases is represented by several well-known definitions.
Phase 1 (1950-2000):
Diverse commitment to society and environment
The term CSR first appeared in 1953. The first definition comes from Bowen and sounds quite contemporary: „It refers to the obligation of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of objectives and values of our society.”[1]
This alignment with the interests and values of society is similar to today's approach. However, in the past millennium this point of view was pushed aside by other positions. First and foremost through Friedman: „There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.”[2]
These contradictory approaches led to a variety of interpretations that Caroll finally summarized in his "CSR Pyramid": „The total corporate social responsibility of business entails the simultaneous fulfilment of the firm’s economic, legal, ethical, and philanthropic responsibilities.”[3]
Apart from these different perspectives, a central pattern of thinking emerged, that is particularly characteristic of this first phase of CSR. According to the World Business Council for Sustainable Development (WBCSD), the "giving back to the society”-approach became the central feature of CSR, as WBCSD-president Peter Bakker explained: “What CSR used to be: You run the company the way you have always done, and you give back a little to society.”[4]
Phase 2 (2001-2010):
Integration of social and environmental concerns in the core business
On July 18, 2001, the European Commission published a remarkable Green Paper, one of the most significant milestones in the development of CSR. With this document, the Commission also offered a new CSR definition, that was subsequently adopted by numerous organizations: “Corporate social responsibility (is) a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.”[5]
This was a crucial step: CSR was no longer an isolated project, somehow linked to the company, but a new requirement for the core business: from then on it was not about how companies spend their money (philanthropy), but how they earn it (responsibility for the core business). Social and environmental concerns should be integrated in their business operations. Interestingly, this step should not primarily serve to restrict the freedom of companies and make additional demands on them. It was more in line with the Lisbon Agenda: Within ten years, the EU should become the most competitive economy in the world. The Green Paper explains: “Thus, it should be treated as an investment, not a cost, much like quality management.”[6]
With this initiative, the EU opposed the philanthropy-oriented Anglo-American CSR practice with the new approach of "strategic CSR". In line with this, Porter and Kramer developed their "shared value concept", forcing the view of CSR as a business case and its contribution to the competitiveness of companies. They recommended: “The essential test that should guide CSR is not whether a cause is worthy but whether it presents an opportunity to create shared value - that is, a meaningful benefit for society that is also valuable to the business.”[7] In this context, Porter and Kramer also stated: "The most strategic CSR occurs when a company adds a social dimension to its value proposition, making social impact integral to the overall strategy."[8]
Also, the European Parliament focused on the impact of companies in their report on corporate social responsibility: „Corporate Social Responsibility represents business taking more direct responsibility for managing its social and environmental impact, becoming more openly accountable not simply to employees and their trade unions, but also to wider 'stakeholders' including investors, consumers, local communities, environmental and other interest groups.“[9]
With this focus, the Parliament has already prepared for the third phase, the transformation of CSR management to impact management, including the questioning of voluntariness.
Phase 3 (2011-today):
Impact management
Ten years after the Green Paper, the European Commission has published a new CSR strategy, in which it also offers a new CSR definition: “CSR (is) the responsibility of enterprises for their impacts on society.”[10]
In this way, the European Commission has made a major change in comparison with the Green Paper: it is no longer about voluntarily integrating social or environmental concerns into the core business. Now, every organization is responsible for what it does and what it effects. Organizations are required to look more closely at the multiple effects of their activities and optimize their impact in the two classic areas of non-harming and doing good – along the entire value chain. CSR became Impact Management. This changed approach also questioned the voluntariness: Taking responsibility for the impact of your own decisions and activities might not always be a legal but at least a moral obligation. Now, it is not only about responsibility but accountability.
The Commission was obviously aware of the importance and, above all, the complexity of this new requirement for companies. Because she also demanded in her strategy paper: "To fully meet their corporate social responsibility, enterprises should have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the aim of: maximising the creation of shared value for their owners/shareholders and for their other stakeholders and society at large; identifying, preventing and mitigating their possible adverse impacts.”[11] This was a call for a new management system.
Work on a global standard for CSR started several years ago and was completed by the end of 2010. ISO 26000 is not a management system but a guidance paper on social responsibility with a definition very similar to the EU one: “Social responsibility (is the) responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behaviour that contributes to sustainable development, including health and the welfare of society; takes into account the expectations of stakeholders; is in compliance with applicable law and consistent with international norms of behaviour; and is integrated throughout the organization and practised in its relationships”[12]
The special feature of this standard: It is aimed not only at companies, but at all organizations. The ISO does not use the term CSR, but SR. All organizations are called to manage their impact.
However, a lot remains to be done in this third phase to ensure a successful implementation of this approach. Some of the most urgent questions:
- How exactly should the various impacts be measured and evaluated?
- How should stakeholders be involved?
- How can common impacts be managed together?
First approaches to a solution already exist, including the United Nations’ Sustainable Development Goals, but many questions remain open ...
***
[1] Bowen, Howard Rothmann: Social Responsibilities of the Businessman, Harper, 1953
[2] Friedman, Milton: The Social Responsibility of Business is to Increase its Profits, in: The New York Times Magazine, September 13, 1970
[3] Carroll, Archie B.: The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders, in: Business Horizons, Juli 1991, p. 43
[4] Interview of Peter Bakker, president and CEO of WBCSD at January 15, 2019: https://www.cnnmoney.ch/shows/international-geneva/videos/peter-bakker-world-business-council-sustainable-development [2019-03-28]
[5] Commission of the European Communities: Green Paper. Promoting a European framework for Corporate Social Responsibility. Brussels, 18.7.2001
[6] ibid, p. 4
[7] M. E. Porter and M. R. Kramer: “Strategy & Society, the Link between Competitive Advantage and Corporate Social Responsibility,” Harvard Business Review, Vol. 84, No. 12, 2006, pp. 78-92. Reprint by FSG Social Impact Advisors, 2006, p. 6
[8] ibid, p. 11
[9] European Parliament, Committee on Employment and Social Affairs: Report on corporate social responsibility. 21.12.2006
[10] European Commission: Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, and the Committee of the Regions. A renewed strategy 2011-14 for Corporate Social Responsibility. Brussels, 25.10.2011
[11] ibid
[12] Austrian Standards Institute: ONR ISO 26000, Guidance on social responsibility (ISO 26000:2010), 2011
I think that CSR has come a long way and has undergone a huge transformation throughout the last decades. It is becoming an ever more important field and plays a crucial role in how companies do business today. In the article it is argued that CSR requires a new decision-making process to respond to the increasing complexity of our world. I particularly like this sentence, because I think it could not be any more true. The three phases, which are described in the article, led us where we are today. Now the remaining problems of the evaluation/measurement of the impacts and the involvement of the stakeholders need to be solved.
I have to agree with Katrin Fischer especially according to the remaining problems of the evaluation of the impacts and the involvement of the stakeholders.
The question is, who is in charge here? The government? Every company on its own? The employees? As long as nobody feels responsible, nobody will take action.
In my opinion the solution for a comprehensive SR-implementation will only be possible, if the society itself changes. Managers, who are profit oriented, have to be on the edge of CSR, because the public pressure will request CSR in the future.
The new definition: “CSR (is) the responsibility of enterprises for their impacts on society.” is perfect and should be part of every corporate strategy.
But as there are three current questions, there is only one way to change how the value of (C)SR is seen: we have to change the world together. This is easier said than done, but we will see what the future brings.
I totally agree with Philipp. The society itself has to change. The problem we have faced over the last few decades: Changes start with little steps. And the main question is: Who or what will change first? In my opinion the Green Paper, published by the European Commission, and the ISO 26000 are very important milestones for the further CSR process. I do like the part “It is aimed not only at companies, but at all organizations.” So in fact ALL of us are responsible, not only the big companies.
One important question I have in mind: How long will it last or rather how many phases of CSR are necessary till there is the big change?
I think the development of CSR goes in the right direction. The latest understanding of CSR as Impact Management was an important step. As every person is responsible for their actions, so should corporations and organisation be. But in practical terms I personally see some difficulties in implementing this idea, especially for larger corporations. Because it is a new management concept and implementing such always requires big changes that are difficult to execute in heavily structured systems.
The article examines issues in CSR, emphasising accountability for, and reporting of, the social and environmental effects of a corporation’s economic actions to stakeholders. The corporation’s accountability therefore extends beyond financial disclosures to shareholders and is predicated on the assumption that corporations have social responsibilities that are much broader than generating shareholder wealth.
In my opinion, I also think, that the developement is going the right direction. CSR & implementation is still evolving slowly, but considering the history of the development, we see that the evolvement of new stages & thinking gets faster. I really like the statement that SR should be treated as investment not as cost – I think this is one of the best ways, to show organizations that change and social responsibilty matter and have a positive impact not only on business profits but also on environment and society, who are the baseline for generatig profits.
I really like the comment of Fabian, as I totally agree with him. Everyone is responsible for what they are doing, so CSR is a topic that concerns us all. In my opinion companies have a great responsibility due to their economic power. It is essential and important that this aspect is considered in the development of CSR. The implementation is a challenge but makeable. However, it has to be aware that it is a long-term process on the one side, and on the other side that companies have to take into account that every change in behavior requires motivation. Thus, the following question remains: who and how do you create this motivation?
Social responsibility in a holistic view is too important to segment it on the income-side of life. In my opinion the art of constituting a global society who acts self-responsible needs to adress Kants Categorical Imperative to any natural or legal person, body or entity. If we focus on corporate behavior only, we blind out responsibilities of any other role women and men are performing in their private and public lifes.
Actually, you pack various views and aspects regarding CSR in this article – including positive and negative sided aspects. The very nicely described “history” of the development towards CSR shows how the importance and awareness has risen in the past years. As discussed in class, the direction is for sure positive, but in some ways the speed could by far be faster. Even though, as Samuel states, everyone should be involved and not only corporations blamed and pushed, I think, that for everyone to be involved and intrinsically motivated, a far bigger let’s call it “movement” and shift in mind has to take place, as so far the majority of people ask themselve the question “why me, if (nearly) nobody else is doing sth, especially big companies”. Here for me the question arises whether this movement can be started by a 15-year old girl with a talk and a strike, or maybe it still needs some big organizations as role model (e.g.: getting motivated by the employer to act sustainable by offering additional holidays or a bonus) , or politics, or whole countries, or maybe religion and culture has the biggest impact on us humans? I get the feeling that this path is not fixed at all…
As some of my colleagues stated above, it is crucial to have a change in society to achieve a sustainable future. Which leads to the question: How can a society be changed? In my opinion you have to approach this on different levels. We must hold everyone accountable: Large corporations and small businesses, billionaires and schoolchildren, producers and consumers, .. The extent depends of course on their (e.g. financial) capabilities. While globally operating corporations have to meet set environmental targets, schoolchildren need be educated on sustainable behaviour and life choices.
The three phases described in this article show, that the development of CSR definitely goes in the right direction. The importance of social responsibility is increasing, which can be seen especially by the statement, that all organizations are called to manage their impact. It underlines, that social responsibility is not only the job of huge companies, but all kinds of organizations and all of us. Although papers like the ISO 26000 can be seen as very important turning points, I think that there is still a long way to go until we can see a big and needed change.
As we can read in this article there is a transformation process taking place. The whole process is about changing the mindet not just of businessmen but of everyone. The Commission undoubtedly has taken a step in the right direction and caused a change in the thinking and in the awareness of the people. A few decades ago there would not have been such a discussion about business ethics and social responsibility, but now there is. Nevertheless, one can argue that this process is not fast enough. To speed it up it would be neceressary to include regulations and punishments.
CSR work in the past years has been a good step into the right direction for many companies. The common thinking of the first phase, that managers run the company the way they have always done, and then give back a little to society, doesn’t at all apply to the CSR standards nowadays. Companies not only need to “give back a little”, their actions have to make a positive impact on our society. In addition, it’s not enough to operate in the same way as always as organisations need to align their actions and corporate behaviour to the society’s and the stakeholder’s desired actions.
As history shows, the issue of corporate sustainability has been affecting society, politics and business for more than 60 years. Three major milestones have since been set. I think impact management was not the last one. At some point, it will come to the peak, where being sustainable is no longer just modern and important! The environment does not forgive an unsustainable behavior and there is no longer the question of how companies earn their money and how they spend it, but whether the responsibility for it brings more serious consequences than they have now – when you are literally drowning in your bad decision.
This article is important because you can see the evolution of CSR Management. However the most interesting step is the third step with the point where the most urgent questions about the measurement and evaluation of CSR actions. For some reasons I can’t understand how the European Commission publishes a strategy about CSR without the element of evaluation. I hope that soon the European Union will revise the Green Paper and add strategies to evaluate the CRS actions of companies.
The understanding of CSR in this article gives a really precise and good overview. I think we’ve come a long way already – the three phases are really interesting and I think there has been a really big change, but the evolution needs more steps. As Verena mentioned as well I also think that the Green Paper and the ISO 26000 are very important milestones for the further CSR process. I totally agree with some of my colleagues who mentioned that we still need a solution for remaining problems e.g. the evaluation of the impacts and the involvement of the Stakeholders.
As the three phases show, CSR has been important for over 60 years and has had an impact on society ever since. What I have taken away from this article is that the importance of CSR continues to grow, which is particularly evident in the statement that all organisations are called upon to promote their challenges and opportunities. It underlines that CSR is not only the responsibility of large companies, but of all types of organisations and of society as a whole. Although papers like ISO 26000 can be seen as very important turning points in the CSR process, I think there is still a long way to go before we can see a big and necessary change, because everybody has to realize that CSR is important and everyone must actively contribute to it.
This article is really interesting and significant for our lives nowadays. I like that CSR has to be a moral obligation for companies. But in my opinion the European Commission could also develop this approach further and integrate a private social responsibility. To make the world better everyone has to make an effort – it should not be an obligation of companies.
However, I really like that CSR has developed over the years and that the EU establishes rules to take care of our planet as for example the ban of plastic bags and straws.
As the evaluation part is currently difficult, I could imagine that digitalisation could play here an important role. I am thinking of a digital tool that saves all the activities of corporate social responsibility, for example how much a company spends on charity or how many trees are saved because employees think before they print. On one hand this could make it easier to evaluate the corporate social responsibility, but on the other hand it could also play a motivational role for a company, its CEOs and its employees.
All in all, I think companies should not wait for rules of the EU or other organizations but think about their own ways what they can do to make the world a better place.
The article is a brief summary but well described how CSR has developed over the past years and its position nowadays. CSR has gone through a great transformation to the point of where it is today. However the development of CSR has way to go. A major impact of the our behavior and companies integrating CSR into their company standards will be defined by the EU who will set rules that will guide us. As with everything else in life people need guidance and need to be advised, however as stated above companies are from now on responsible for what they due and the effects.
In the end, it is us as every single person that can add a bit him/herself to make the world better and get a clear understanding of what CSR is about and how crucial it is for all our lives.
This article describes the development of approaches towards Corporate Social Responsibility very well. What I find interesting, is the fact that the newest definitions of CSR, although they have changed so much over the years, return to the ideas of the 1950s regarding their idea of the organizational impact on society.
The article gives compact and precise overview of the CSR paradigm development from 1953 till nowadays. It is valuable to see which transformation took place and where we stand today. From all those definitions it is clear that the term is still very new and represents an open developing concept. This gives a hint that its implementation is also a challenge notwithstanding company size. I am very curious how the further development of the concept goes on in regard to digitization, economical split between South and North, climate change etc. Very exiting and multi-disciplinary paradigm on the edge of sociology, politics, ethics, business and technologies.
Society development has shown a noticeable direction over the last years. The article covers different milestone of human history and focus fields where certain global events had an huge impact on CSR and its value development. Standards have changed and companies do transform and take time to give back something. Holistically people still do not take certain steps to get the glance they need for the “big picture”. Without the necessary view on this we can’t get the credits we need to take important steps for the future and treat every aspect with essential actions.
The history of the development towards CSR shows how importance and awareness have increased in recent years. Nevertheless, CSR is still understood in different ways. I believe that it is precisely the changes in definition in the past that have not necessarily contributed positively to this different understanding and are still causing confusion. I absolutely agree with the comments of Seyla and Fabian that CSR is an issue that affects everyone. I therefore believe that more attention needs to be paid to this issue. The intrinsic motivation of each individual must be increasing. I believe that implementation is feasible, but it is a long-term process that is progressing too slowly. That is why I hope as well that the European Union will revise the Green Paper and add strategies for evaluating companies’ CRS measures.
This article gives a really good overview of the huge transformation of CSR. It describes how CSR has developed over the past years and shows all major points of transformations until where this concept is today. However, I think there is a long way to go to fully integrate social, environmental and governance questions into business strategy and operations. The society is changing constantly – so businesses need to take advantage of the way our society is changing. Like, now individuals are more empowered and connected than ever before and (many) organizations need new ways of communicating with and engaging their stakeholders. In my opinion, therefore, organizations have to understand that this change is an ongoing process, to which they have to adapt their own strategies continuously.
The article gives a good overview of the development of CSR. In general I like the CSR Pyramid that is mentioned at the beginning of this text. I like the exeplanation of CSR. – it´s short and understandable and makes it more tangible for the reader.
Also “giving back to society” is important in this context. Now in times of buyer markets where the customer has more power it is time to give something back to society. Due to the fact that the markets are saturated it gets more difficult to stand out and to develop an USP. Therefore I think CSR strategies can we used very well as “a requirement for the core business”.
In addition it is important that organizations recognize that they are responsible for their doing and for the related impacts of it. Therefore it´s good that CSR is not voluntarily anymore.
Where I am not sure about is that CSR is also a new management system. I admit that it has to be somehow integrated in the management but I would not call it a new management system.
It has already been mentioned by my colleagues above, but I also think that CSR is heading in the right direction. However, something like “social responsibility” is one thing that needs to be understood and implemented by each individual by itself. I don’t think that something like this can be done with coercion. It has to be taken for granted in people’s minds. In order to achieve this, however, it will take some time because it is a long process.
I believe that the involvement of stakeholders is a good thing, because in this way more people are confronted with the topic of CSR. Furthermore the communication of good CSR activities on the one hand, makes the company proud and on the other hand, may inspire other companies to do the same.
The development of CSR has improved majorly in the last years. Managers get an idea of what it means to act in an ethically correct way and try to include it in the corporate strategy. Nevertheless they will have to keep on improving their CSR strategies because society’s pressure will increase. But I have to agree with many of my colleagues, that in practical terms there might be some difficulties in implementing a holistic CSR concept in large companies, because it requires huge changes and also a lot of money.
The article gives a well-arranged overview about the evolution of CSR. In my opinion we are on a good way sooner or later CSR will become indispensable. Of course we can be proud about the development of CSR but we are still challenged to get better and better. For some companies, I still feel like they got stuck in their minds in 2000. It is enormously important that companies realize that they have a large impact on our future planet. It is not very effective when on the one hand the european world gives CSR a high priority in corporate policy and on the other hand the eastern world don’t mind about the CSR. So in my opinion we all have to keep on moving.
CSR is not, like in the last 10 years, just green washing, because the managers from today know, that they can´t to this. People are more sensitive about ethical topics than in the past. That´s one of the reasons, why a company has to make sure that they can offer some ethical topics to their stakeholder. If they don´t do this, the stakeholder will turn their backs to this company because the attitude of todays society is to be feel good, because if doing good things. So the companys also have to do good things and make good ethical decisions.
The article gives a good overview of how corporate social responsibility has changed over the past decades. Today it’s necessary and important for organizations to implement social responibility in their business model, instead of only generating profit.
But as many of my colleagues have been written, i also think that the society itself has a major impact on this issue. So it‘s important that everyone of us change their daily behaviour in order of sustenability too.
I think CSR is developing in the right direction, but unfortunately this process is too slow.
In my opinion CSR is developing in the right direction, because people and organizations are getting more and more sensitive with corporate responsibility and sustainable issues.
First and foremost, the article has illustrated the fact that CSR – or as ISO 26000 argues – SR is a process. Accordingly, it would be illusory to expect large corporates to hollistically implement all of the measures described above. In my opionion a moral obligation will – at least for now – not be enough, to get the most powerful corporate players in line. I believe that most of them are still stuck in phase one, meaning they still consider their main purpose „to use [their] resources and engage in activities designed to increase [their] profits so long as it stays within the rules of the game.” To tackle this problem, there are really only two solutions. Number one – the short-term fix – is to implement legal restraints. Number two – and this is where CSR has really come a long way – is public perception. Unsustainability is less and less accepted by the average customer, meaning that those companies, who do not care about serious CSR measures, will eventually lose said customers. And this what they are most afraid of.
First of all I like the historic perspective of this article. CSR has gone a long way, but still there is an immediate need of change. I agree with my collegues, that CSR is a responsibility for all of us. Small steps regarding our daily behaviour can make an impact on our environment. Unfortunatly it is not that easy to act in a perfect way of CSR. Therefore the system has to be changed. Espacially politics have a great responsibility and the power to make a change. In my opinion there is a lack of political pressure in terms of CSR.
A very good and comprehensive overview of the development of idea and concept of CSR – for me it was particularly interesting for that in parts newer definitions follow the oldest one by Mr. Bowen – “to make those decisions, or to follow those lines of action which are desirable in terms of objectives and values of our society.” – and expand the core principles of CSR in the burning issues of today, such as wealth inequality or climate change.
In face of these burning issues I would make a call of stronger action from institutional bodies such as EU. Global challenges should be met with stronger regulations (such as recent one-way plastic ban from 2021 onwards), which would move from individual responsibility of an ethical customer to a corporate responsibility, level “the rule of the game” for all companies and necessarily reduce the voluntariness of CSR.
However I agree with Markus Strohmayer that public perception – and willingness to vote for the officials who propose such a political course – is indispensable for imposing such legal restraints long-term, so the role of CSR communication and mass public action will be even more important in the future.
I also think that the definition and understanding of CSR has improved over the last years. But although the awareness is here we still have to work on the implementation. “We” in this case means of course the government, large corporations but also small ones and individuals. Everyone has to work together and be aware of it´s responsibility in order to change the society as a whole and make a difference.
I agree with my colleagues. The problem is that individuals don’t recognize when they are
changing something. Therefore it is very difficult for many people to leave their comfort zone and
change something. I believe that it is the duty of large companies to show how things are done.
These companies have so much influence on the environmental, social and ethical conditions for
each and every one of us. Nevertheless, everyone is responsible for what they do. The sentence
„CSR (is) the responsibility of enterprises for their impacts on society.” shows that pretty well.
The history and numerous views on CSR cited in this article provides a clear (positive and negative) quick view. As described in the article, the impact from and towards stakeholders has risen over the past years and the knowledge of the history is crucial. Like discussed in class companies start to realise how important it is for them to really live CSR in order to succeed in modern markets in which stakeholder have to be actively included. My personal opinion is that good that CSR needs a new decision making process to respond to its stakeholders. But not only thought about CSR: like described SR shall be a matter of all: not only companies but also individuals. SR generelly has to be lived amongst societies in order to create a more sustainable world. Only if companies as well as individuals work on a better world, tomorrow can be sustainable and the interaction between everyone in this process is crucial.